Mortgages are complicated business, and there certainly isn’t a "one-size-fits-all" approach in this industry. First off, there are hundreds of different banks, lenders, and credit unions that offer mortgages, some of them entirely unique.  These companies compete with one another to offer the lowest rate and/or the best customer service. The well-known names might offer higher rates in exchange for their perceived trust and familiarity.

Meanwhile, the smaller guys might offer rock-bottom rates to simply stay in contention with the big players.  Along with that, every loan scenario is different (just like a snowflake), and must be priced accordingly to factor in mortgage default risk (risk based pricing).

Put simply, the more risk, the higher the mortgage rate. But that’s just the tip of the iceberg.

Mortgage rates don’t exist in a bubble – the parts affect the whole.  Banks and lenders start with a base interest rate (par rate) and then either raise it or lower it (rarely) based on the loan criteria.

There are loan pricing adjustments for all types of stuff, including:

• · Loan amount
  
• · Documentation (full, limited, or stated)
  
• · Credit score
  
• · Occupancy
  
• · Loan Purpose (purchase or refinance)
  
• · Debt to income ratio
  
• · Property Type
  
• · Loan to Value / Combined loan-to-value
  

The more you’ve “got going on,” the higher your mortgage rate will be. And vice versa.  I’ve already covered a few related topics, including why mortgage rates are higher for condos and investment properties. Mortgage rates also tend to be higher on jumbo loans and refinance transactions, especially those involving cash out.

In addition to the reason above, most "Advertised" rates do not disclose the entire cost structure of the loan.  Every lender can "Buy Down" your rate with enough fees, so they can advertise extremely low rates coupled with extremely high "Non-Disclosed" fees.  Almost any lender can "Buy Down" the rate, if they know the entire package of charges that are coupled with the low rate.

You know those mortgage rates you see on TV or on the Internet?  Those assume you’ve got an owner-occupied single family home, a perfect credit score, a huge down payment, and a conforming loan amount. Not to mention a newborn golden retriever with an unmatched pedigree.

Most people don’t have all those things, and as a result, they’ll see different mortgage rates. And by “different,” I mean higher.  How much higher depends on all the factors listed above.  So take the advertised rates you see with a huge grain of salt.

One last thing. I’ve been asked if mortgage rates can vary from state to state, and the answer is actually yes. In fact, they can even vary by county.  But it might not be for any one reason, such as a higher default rate in state X or fewer natural disasters in state Y. Or more regulations in another state.  It’s more to do with the fact that lenders want to increase their business in a certain part of the country, and thus they’ll offer some sort of pricing special or incentive to drive rates down in say California.

So you might see a ratesheet that says .50% rebate state adjustment for loans in CA and FL, for example. This will give them a competitive advantage in those regions.  Conversely, you might see a pricing hit of .25% for another state like New Jersey or New York. In other words, rates can be priced both higher and lower depending on the state where the property is located.

Of course, if this results in unfavorable pricing you can just move on to a different lender that doesn’t charge more for the state in question.  This is why our service is so important, our expert review your loan terms and determine if you are being overcharged in any way.

That is the great thing about Ratecheck.loan, you can get just one quote and have it checked by the experts.  They will tell you what the going rate/fees are for a particular situation, YOUR SITUATION.