How to Read a Mortgage Rate Sheet

Mortgage lenders create rate sheets every day. These tables or spreadsheets detail interest rates and costs. Looking at the rate sheets from several lenders can help you when shopping for a mortgage. Here are some tips to help you read a mortgage rate sheet.

What It Tells You

Most rate sheets start at the same base rate, changing daily based on the government prime interest rate. Then they list all of the costs for each change a lender makes. Potential homebuyers are often inundated with rate quotes from potential lenders — by mail, online and even over the phone. But these rates aren’t taking into account your specific situation. By looking at a rate sheet (online or printed on paper), you can choose a loan with more information.

How to Read It

You will want to have an idea of what program and term you are interested in. Programs are the type of loans — conventional, FHA, etc. Term refers to the number of years (typically 15 or 30) on the mortgage.

The rate sheet will show you a range of costs for the loan you are interested in. Every adjustment will have a cost, either positive or negative. Adjustments include loan size, state the property is in, credit score, etc. This represents the amount of risk the lender is taking on by loaning you money. For example, the better your credit score, the lower the risk.

You can add all of the adjustments that apply to your situation and this will tell you what you will have to add or subtract from the interest rate points.

What to Do

Rate sheets show a range of lock-in terms. They are usually 15, 30, 45, 60 or 75 days. This is how long the rate is good for and the shorter the term, the less it costs to lock in the rate. Obviously, the longer the term the more time you have to think about your decision and gather all the documents you’ll need for closing.

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Understanding a mortgage rate sheet can give you a better idea of what rates you can expect to be offered on a mortgage. This way you can negotiate better and not be surprised by what the lenders suggest when you are shopping for a mortgage to buy a home.