Understanding Mortgage Rates [Don't Be Fooled!]

Understanding Mortgage Rates: What goes into them, what you can expect, and what you qualify for. A lot of things go into mortgage rates today, and it can be confusing when mortgage rate shopping to know what you actually qualify for.

In this video, I will break down what goes into determining a mortgage rate, what you can expect to see when shopping rates online, and how to know what you actually qualify for!

Watch on YouTube: https://youtu.be/n7qqlEhxX3Q


Hi, I'm Stephanie Weeks and if you're interested in mortgage rates, you have come to the right place. By the end of this video, you will have a definite better understanding of mortgage rates, what goes into them, what you can expect, and how you know what you specifically might actually qualify for. 

Again, I'm Stephanie Weeks and I've been a loan officer for 17 years. I drop new videos every Tuesday and Saturday, so be sure to subscribe to the channel and hit the bell to be notified every time I drop a new video. I have helped thousands and thousands and thousands of customers with their mortgage financing and I have so many five star reviews. For those of you that I can not help, because I'm not licensed in every single state in the US, I've created this channel to help you understand anything and everything mortgage education and to make you part of the lucky community that has had a good experience of a smooth and on time closing. 

If you like saving money and if you care about your money, your hard earned money, you wanna get the best deal that you can and have the best mortgage payment possible, well, a lot of that goes into what interest rate that you get for your mortgage. 

Boy, is this topic confusing. If you wanna have a lot of fun for yourself, why don't you just Google "What are today's mortgage rates?" You're gonna get so much feedback and you're gonna get so many charts of interest rates and what's the most interesting is that most people, probably about 95 or 97% of people will not qualify for those rates posted. So we're gonna dive into, today, why that is, what goes into a mortgage rate, and how do you know what rate you actually qualify for. 

If you wanna learn from me, you wanna learn the things that I did wrong before I was in lending, then you can save yourself a lot of time and headache. So the quick story is I bought my first house at 18, of course I got a mortgage because I didn't have the cash. Lived in that house for a couple of years and decided that it was time to buy something else. I wanted to make money on that investment and sell it. So the next thing I decided to do was actually to build a house. Which was cool, it was fun, it was a great experience, I learned a lot of things not to do, including how to not shop for a mortgage. 

So the first house, my builder said, "Call this lady," and that's what I did. I didn't shop around, I didn't ask a lot of questions, I called the lady, we went through with it. The second house, I was like, "Well, I know a little more now, I'm gonna learn from this." So we purchased our lot and then we were going to build a home. Well I thought that the best way to get the best rate was just like shopping for anything else, make a bunch of phone calls and get some quotes. So I made a lot of phone calls. Phone calls saying things like, "What is your interest rate? "I would like to get a quote "for your mortgage interest rate today." And I got answers. I got answers every single time. And most of the time, I didn't get asked a lot of questions, I just got told that rate. And that was really, really dumb and I did not know any better. Because the rate that you're being quoted almost always, online and if you just randomly call around and say, "What's your rate?" most of the time this is what you're being quoted. A conventional loan, 30% down. Who has that? Probably less than 5% of people from what I see. Conventional loan, 30% down, a purchase and not a refinance. Yes, a purchase and not a refinance. A loan amount between 250 and 510,000. Yep, even the loan amount matters. A 740 or better credit score and a debt-to-income of 45% or less, a 30-year mortgage, and most likely, paying points, which means you're actually paying money to get that interest rate. Let that sink in for a second. Do you fit in that box? Because certainly most people do not. 

The second that you want 100% loan, that's not the rate. The second you want an FHA loan, that's not the rate. You second you want a VA loan, guess what? You just got the wrong rate. The second that you want a conventional loan maybe with five or 10 even 3% down, guess what? You got the wrong rate. The second that you don't have better than a 740 credit score, keep in mind an average credit score is typically 680 to 700. You don't have a 740 credit score, you just got quoted the wrong rate. You're not putting down 30%, what? You just got quoted the wrong rate. Maybe you don't want to buy the rate down. Maybe you don't wanna pay points. Guess what. You just got quoted the wrong rate. You're right, that's exactly what I was gonna say. 

I want to teach you and educate you on, yes, you can shop around, but I wanna talk to you about reading the find print and I wanna talk to you about what to give as far as what information to give and share if you do call around for those rate quotes. 

Remember, I said I called around and said, "Hey, what's your mortgage rate? "What's your mortgage rate? "What's your mortgage rate? "What's your mortgage rate?" What I didn't realize is that rates change every day, sometimes multiple times a day. So until you lock in, it does fluctuate. That's the first thing I didn't know and I want you to know that. The second thing that I didn't know is, remember, I said, "What's your rate "What's your rate? "What's your rate?" Let me tell you how that conversation should have gone.

"Hi, I'm calling to get your mortgage interest rates. "May I speak with your loan officer? "Great, hi, Sally, Jane, John, Robert, "whatever your name is, "I wanna get a mortgage rate quote "and I'm gonna give you the information "that you're gonna need to do so. "I'm purchasing a home, "I'm probably gonna spend around $200,000. "I'd really like a program with a minimal down payment "and my credit score is around a 750. "I'm looking for a 30-year loan. "I do not want to pay any points at all. "What does that rate look like that you have to offer?" That's one example. Here's another one. "Hi, I'm calling to find out "what your mortgage rates are today "and I'd love to give you some information "that you'll need to know to answer that question for me. "I'm not 100% sure, but I've done a little bit of research. "I'm a first time home buyer. "I'm thinking I might be a good candidate "for an RD or an FHA loan. "I have an average credit score. "I'm probably gonna wanna spend in the $150,000 range "and I'm trying to get an idea "of what a good interest rate for me might be." 

Much better, right? Trash in, trash out. That's the rule, you know? If you don't give good, good, good, clean, detailed information then you're not gonna get good, good, good, clean, detailed answers. Therefore, it's garbage to you 'cause it doesn't make any difference to you if you don't qualify for that, you're not getting that, things like that. 

Let's talk now about what if you're just looking on Google and saying, "What's the best interest rate?" Here's the interesting thing. I do this all day every day and I know exactly what I'm looking for and even then, when some customers call and say, "Hey, I'm looking for an interest rate "and I think I can get this rate "because I saw that online." And then I'll say, "Well, what website, what did you Google? "Let's look at it together, let's find it." Keep in mind, I know exactly what I'm looking for and sometimes to find these assumptions it takes me five minutes. But that's what you're looking for. If you're looking all around online and you're trying to get a good interest rate and you end up at janedoe.com, who knows what website, who knows what lender, but you get there and you're looking at a rate, you need to find, spend the time, have the patience, do your due diligence and find where it says assumptions. Because even the state you're financing in can make a difference on the rate. There are so many things that go into that interest rate. 

Let's do something live right now. (dog barking) Oh, and say hello to the puppy who's barking in the background. All right, let's see, today's mortgage rates. Okay, so we're diving in, I've got a website pulled up, not gonna say which one, but I just wanna go through everything live with you that I'm talking about. My search was, "Today's mortgage rates" and then I found a lender. And since refinancing is the huge topic right now, I went under refinance rates. Refinance rate 3.625%. Points zero. And the information stops there. That's what's on the screen. So if you're like most people, you're gonna think, "Oh, okay. That's the rate. "3.625 based on this website today." But remember, we've got to look up the assumptions. I found a couple, but not even all of them. "The advertised rate is subject to change without notice at any time and is not available to every borrower”. "Advertised rates are based on certain assumptions and loan scenarios. "The rate you receive will depend "on your individual circumstances, "including your credit history." What'd I say? 740 or better score. "Your loan amount." What'd I say? A loan amount between 250 and 510, typically. "Down payment." Remember? I said mostly likely 30% or more. "And our internal credit criteria. "Advertised rates are based "on fixed rate mortgage loan rates "and will vary based on the term of the mortgage loan and will vary based on the property location”. "Our mortgage loans have a minimum of $50,000 loan requirements" 

And this one doesn't even go into all the details I wanted to see, like what credit score, what loan amount, what, what, what, what, what, right? It just gave you a bunch of generals. Okay, well who qualifies for that? It's very confusing if you don't know what to do to check for the further assumptions. 

Let me see if I can try one more real quick without boring you like crazy while you wait on me. Oh, look at this. "Louisiana mortgage rates at 2.46% fixed." Hmm, okay. Well, let me find the assumptions to get this fantastic rate they're advertising. Okay. "Rates posted are based on a loan amount of 250,000, a conventional loan, a down payment of 20% or more, a 30 year term”. "Rates quoted are not guaranteed for every loan, are subject to change and availability.”. "Rate based on a 15 year mortgage". How many people do that? "This rate includes one discount point." 

I think you get the idea. So the point is look for the assumptions. Look for the information. Know that it's case by case. Make sure that you're getting quotes based on your situation. Don't forget to tell the people, or the loan officer, I'm sorry, all of the details that we're talking about that they're gonna need to quote for your situation, not just the best rate available, but for your situation. 

Drop me a comment below. Let's go with all-caps W-I-N if you feel like you can win at the mortgage game and now that you know about interest rates, what you can expect, what to give, what to get, what to ask, and how to search to find the answers to those assumptions. 

I'm dropping a cheat sheet for you in the links below and today's cheat sheet is actually gonna be 15 versus 30 year loans. The reason for that cheat today is because we've talked a lot about mortgage rates, the differences, and now that you've gone through this video you realize that 15 year rates are a lot of times a much better rate than the 30 year option. 15 year is not for everybody and I want you to know the pros and cons and the things to consider when determining your term. So today's cheat sheet is 15 versus 30 year term and I'll drop a link to that in the comments below. 

Thanks for tuning in. I'm gonna drop some links to some other videos here for you guys today. I'd love to connect with you on social media. I've gotta cheat 'cause I can never remember my Twitter handle. It's @LoanLady_Steph and my Insta handle is _therealstephanieweeks. Thank you and have a fabulous day.

September 28, 2020
First-Time Home Buyers