Do Non-conforming Rates Move Opposite Of Conforming?
I'm working on multiple purchases for rental property, and have been excited to see that conventional financing rates have dropped to a four-month low. When I called my broker to ask how close to done we are with the 100% investor financing he had lined up, he informed me that the rate had gone UP. I was shocked, and told him so. He asserted that while it's true that rates are down, that's for conforming financing, and that non-conforming, which is what I'm getting, is priced differently. He's been doing this for many years, and I should believe him, but it's hard for me to see what would cause the rates I'm getting (30F) to go UP while all around me, they are going DOWN.
Has anyone else seen this strange phenomenon and can you help me understand why? :-?
Think about what you say above: 100% financing. The higher the LTV the higher the interest rate, no matter what credit score, reserves, D/R, ect. The bottom line is RISK. At 100% financing you are a high risk!!!!!!!!!! You have none of your own money involved.
This should help you understand why
Lori
[addsig]
Hi Lori,
I totally understand that I'm a higher risk to a lender. What I don't understand is why my rate would increase almost a full percent in the past month. I have personally incurred no more debt nor done anything to make myself more of a risk. And cost of funds is dropping. So why the increase?
My guess is that the broker is pushing the rate up to get a larger comission.
...and then there's that...but I don't wish to dog fellow mortgage brokers