How to find the Best Mortgage

The mortgage business is highly competitive, and the methods for awarding mortgages is is not random at all but is based on mathematics and probability.  It is basically all about risk management.  The higher the risk of default of an applicant, the higher is the interest rate and of course vice-versa, the lower the risk, the lower the mortgage rate.  If the risk is too high for the mortgage company, they will simply deny the mortgage.

Mortgage companies generally published interest rates for their mortgage products.  However, this can go up or down based on adjustments that are made in each individual case.  Such adjustment can give you a higher rate or a lower rate depending on the circumstances.  Ultimately they are all aimed at identifying risk.

Major Factors that go into the Best Mortgage Rate

The following table shows some common factors that go into your mortgage rate calculation.  Getting the best rate means to manage these factors wisely for your particular case. 

Factor Better Rate
Worse Rate
Rate Impact
Property Type

Single Family Home

Multi Family

Primary Residence

Second Home
Investment Property
Loan Amount

Below $417.000

Above $417,000 (Jumbo)
Mortgage Company
High Rates
Low Rates Medium
Mortgage Broker High Brokerage Fees
Low or no Brokerage Fee Medium
Reliable Market value appraial  Below Market value appraisal Low
Type of Mortgage
15 Year Mortgage
Adjustable Rate Mortgage (ARM)
Fanny Mae Loan
VA Loan

30 Year Mortgage
Interest Only Loans
Documentation Full Documentation No Documentation, SIVA, SISA, NINA High
Down Payment 20% and Above Below 20% High
Points Pay Mortgage Points Don't pay Mortgage Points High
Credit Score  Above 720 score Below 660 Score High
Employment Stability
More than 2 years
Increasing Income

Less than 2 years
Declining Income
Income Stability   Stable Income over many years
Increasing Income
Unstable income
Declining income
Debt compared to Income
Monthly debt payment <25% of income
Mortgage Payment < 35% of income
Monthly debt payment >25% of income
Mortgage Payment >35% of income
Cash Reserves
Cash reseves 6 month or higher
Less than six months cash reserves  Medium