How We Determine Your Rate
Learn how lenders price mortgages, which levers you can influence, and how we benchmark every quote we deliver.
The basics of mortgage pricing
Mortgage rates aren't arbitrary. They're based on a complex interplay of market forces, risk factors, and individual borrower characteristics. Understanding this process helps you make informed decisions and potentially qualify for better rates.
Key Components of Your Rate
- 1.Base Rate: Tied to mortgage-backed securities (MBS) prices, which fluctuate with bond markets
- 2.Risk Adjustments: Based on your credit, down payment, and loan characteristics
- 3.Lender Margin: Covers operational costs and profit
Market factors affecting all rates
Federal Reserve Policy
While the Fed doesn't set mortgage rates directly, their decisions on short-term rates influence the entire rate environment. Fed rate hikes generally push mortgage rates higher.
Bond Market Movement
Mortgage rates closely follow the 10-year Treasury yield. When bond prices fall (yields rise), mortgage rates typically increase.
Economic Indicators
Strong economic data (GDP growth, low unemployment) often leads to higher rates, while weak data can push rates lower.
Inflation Expectations
Higher inflation erodes bond returns, causing investors to demand higher yields and pushing mortgage rates up.
Your personal rate factors
Credit Score Impact
Your credit score is the biggest personal factor affecting your rate. Here's how scores typically affect pricing:
Loan-to-Value (LTV) Ratio
Your down payment directly affects your rate through the LTV ratio:
- •≤60% LTV: Best pricing tier (40%+ down)
- •60-80% LTV: Standard pricing (20-40% down)
- •80-95% LTV: Higher rates + PMI (5-20% down)
- •95%+ LTV: Highest rates (less than 5% down)
Additional Pricing Factors
Property Factors
- • Single family vs. condo/townhome
- • Primary residence vs. investment
- • Property location (state/county)
- • Number of units
Loan Factors
- • Loan amount (conforming vs. jumbo)
- • Loan term (15 vs. 30 year)
- • Fixed vs. adjustable rate
- • Cash-out vs. rate-and-term
How we find your best rate
Multi-Lender Comparison
We work with multiple wholesale lenders, each with different pricing models and specialties. This allows us to find the lender offering the best terms for your specific profile.
Real-Time Pricing Engine
Our technology pulls live rates throughout the day, ensuring you see current market pricing, not yesterday's rates.
Optimization Analysis
We analyze whether paying points, adjusting your down payment, or structuring your loan differently could get you a better rate.
Transparent Presentation
We show you multiple options with clear explanations of rates, fees, and total costs, so you can make an informed decision.
Understanding rate sheets
Here's how to read a typical rate sheet:
| Rate | Points | APR | Credit |
|---|---|---|---|
| 6.375% | 2.00 | 6.521% | -$8,000 |
| 6.625% | 0.00 | 6.698% | $0 |
| 6.875% | -1.50 | 6.842% | +$6,000 |
Points: Positive = you pay to lower rate, Negative = lender credit
Credit: Lender credits can offset closing costs
APR: Total cost including rate and fees
Ready to see your personalized rates?
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