Chances are that you probably see advertisements all over the internet quoting rates. Sometimes they claim to offer the lowest rates in 30 years, and others give a specific rate while providing very little information about what type of borrower qualifies at that rate. You might wonder how accurate these ads and quotes are, or what the rates are based off of.

These ads are almost always different than the rate that you will receive. It is impossible for anybody to quote you an accurate rate without taking a full loan application and pulling your credit report. Even then you will need to lock into your interest rate to know that it wont change before closing.

This tactic is similar to those used by car dealerships promising 0% financing. What they don't tell you is that this offer is only good for people with spotless credit and a sizeable down payment.
Obviously making a loan to someone with a 580 credit score and no down payment is a bigger risk to a lender than making a loan to someone with a credit score of 700 who is putting 20% down. The bigger the risk, the higher the rate.

Be aware that lenders offering the best rates for excellent credit borrowers often don't have the best rates for individuals with lower credit scores. In fact, some lenders advertising the lowest rates are not interested in giving loans to credit challenged individuals. However, there are many mortgage professionals that specialize in lower credit score, or sub-prime, loans.

Just because that particular interest rate is available does not necessarily mean that rate and program is available for you. Many times, you'll receive mailers or see an advertisement online that's designed as a "hook" just to get you to call in. As you get further through the application, you'll be able to find out exactly what you qualify for.

 

 ++