Why was Jerry’s Rate so Much Lower?

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Posted To: Community Commentary

A primer to the misunderstood factors that determine Jerry’s (and Shawn’s, and your) interest rates… The excitement in Shawn’s voice was palpable. He called me based on his friend Jerry’s recommendation. Rates hit a multi-month low during January 2015, and I had just closed Jerry’s home purchase at an appealing 30 year fixed rate. The transaction closed as planned, with no surprises, and Jerry was pleased enough to pass my info along to Shawn, who was considering refinancing his rental condo. As Shawn and I continued our conversation, he shared more details: he owed $194,900, the condo’s approximate value was $245,000, and his mid credit score was 691. He paid his own taxes and insurance, rather than escrowing them with his payment. He also had a small…(read more)

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