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Wednesday, January 19, 2011

Risk Factors That Will Increase Your Mortgage Rate

Fannie Mae has a matrix (PDF) that shows what risk factors will increase your mortgage interest rate and by how much. Of note to real estate investors: investment properties will add at least 1.75%. (But then, we all knew mortgages for investment properties cost more.) The matrix also shows how much your rate will increase based on your credit score. They also give the adjustments for condos, manufactured homes, 40 year loans (as opposed to the normal 30 year) and some other scenarios. Interesting reading.

3 comments:

triple net lease said...

The mortgage rate isn't the only factor to consider. There are good solutions out there to solving a mortgage crisis. One that's worth looking into is one of the various refinancing loans that are available.

David said...

Investment property loans cost an additional 1.75 points up front, they do not add 1.75% to the interest rate on the loan, just to clarify that point.

David

Shaun said...

That's close but not entirely accurate. The Loan Level Price Adjustment is what Fannie Mae will charge the bank when (if) they buy your loan. As a result, the bank will adjust your upfront fees and / or your interest rate to accommodate this fee. (http://www.atlantacondoloft.com/fannie-mae-loan-level-price-adjustments/) How each lender incorporates this charge into your loan will vary by lender - some will charge an upfront fee, some will increase the rate, and some will do some combination of both.

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