Three Most Important Factors Influencing Your Rate

Customers often ask questions about the interest Mortgage Lenders of America can offer. Borrowers want to learn what their interest rate will be, and how it is determined.

A common myth is that your lender determines your interest rate. Many factors impact the interest rate you receive, which includes:

  • Your monthly income
  • Occupation and length of time with employer
  • Homeownership status and history
  • The frequencies of your moves, patterns of behavior, and the timing of that behavior

The good news is that there are steps you can take to make sure you qualify for the best rate available. MLOA evaluates your credit based on these three Cs:

Credit

Creditworthiness is associated with your FICO score. You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Your credit alerts us how likely it is that you will repay the loan. It tells if your payments are on time, up-to-date and much more.

Capacity

We rely on your debt-to-income ratio to determine your "capacity" to borrow funds. Your debt-to-income ratio is the percentage of your income spent paying debts. It tells us if you are you able to repay the new loan, what level of outstanding personal debt you have and if you have enough earning power and net worth to repay a mortgage or home equity line of credit.

Collateral

MLOA also takes into consideration if you own something of value that can be promised to the lender if you don't repay the loan. The relationship between the amounts of money the lender lends to the appraised value of your home is called the loan-to-value ratio. The type of collateral used to secure the loan will affect the lender’s acceptable loan-to-value ratio.