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Chris Salese

If you are looking to borrow money, then most likely the person or bank lending you the money is going to charge you a rate for the use of those funds until they are repaid in full.

Therefore, it’s important to find out what the rate is before you sign up to borrow those funds.

While this is certainly a familiar practice, the answer to the common question “What’s your rate?” can come in several different forms from your lender.

As an example, the first is what’s called ‘rate ranging.’

In this approach, your lender will often quote rates within a range. Sometimes the range is a quarter of a percent and other times it can be up to a half of a percent.

Every so often, based on the scenario, the range could be a full percent or more. By working within a range, you can smartly budget for changes in market conditions that you can’t control.

If you are trying to purchase a home, this is a great strategy, especially if you haven’t found the right one yet.

The second form could be ‘rate chasing.’

Whether you’re seeking a specific rate because it’s either qualification-driven or trophy-case related, it’s typically the trickiest one to obtain.

Many lenders will market their lowest rate, which, unfortunately, is usually attached to a loan product or program that you don’t need.

In fact, your lender’s best rate of the day might be something that initially appears affordable and attainable, but then ends up being expensive and hard to secure due to an incomplete loan application or inaccurate information somewhere in your file.

In order to truly capture the best rate for you, it is critical that your loan application is fully complete, plus all of your financial and credit information is updated in your file.

Sometimes this is referred to as ‘rate structuring,’ where you are able to meet as much of your lender’s criteria as possible upon your request for a rate.

For instance, when requesting a rate quote, you should be prepared to know if you will need subordinate or secondary financing. You should also know your loan amount, loan purpose, loan program, loan term and loan type.

In addition, you should know your purchase price, appraised value, property type and number of units, if applicable.

You should know your desired down-payment amount, your current FICO scores, if you want an impound account and the county where the property is located.

You should know if you want to pay points, opt for an interest-only feature or perhaps take advantage of lender paid mortgage insurance.

Lastly, you should be clear with your true occupancy plans for the home and your goals for the property you are financing.

If you are able to properly “rate structure” with your lender, then you will eliminate surprises and feel confident about the rate quoted to you. Otherwise, getting a rate quote won’t mean much at all.

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Chris Salese can be reached at or (707) 363-4439. He is a licensed California mortgage banker (NMLS 254469 /1850 CA BRE 01377933/01215943) and equal housing lender.