3 Factors That Determine Your Mortgage Rate

Dear friend,

In this article I’d like to share the three most important factors that determine your mortgage interest rate. These tips will also help you get approved for a home loan.

In my over 20 years of experience working with home-buyers and helping them get approved for home loans I’ve found the first most common question they ask is, “How do I get the lowest rate?”

People often think having the lowest interest rate means getting the best deal. However, that’s not always the case. Sometimes a higher rate is the better choice financially over the course of a loan (for certain tax advantages, for instance).

I advise my clients they will always get the lowest rate they’re qualified for. The better question to ask – a question that will ultimately give you the best deal, saving you money and helping to grow your financial situation – is “How are interest rates determined?”

If you know which factors make up your interest rates, then you’re guaranteed to make the best financial choice when it comes to your home loan.

There are three factors that determine the interest rate on a mortgage.

Factor #1: You

Your financial history should never be a mystery. In order to get you the best deal on your mortgage, we’ve got to be able to prove to a lender that you’re a great client worth competing for. In order to do this, we need to know what lenders are looking for.

The factors that make up your profile, for instance, are: Income-Consistency, Debt Management, Total Debt Amount, Your Liquid Assets, and your Credit Score.

In the post, How to Make Lenders Compete to Give You Their Money, I dive deeper on all five of those factors to best prepare you for your loan application.

In essence, a mortgage officer’s job is similar to sports agent’s job. We position our clients in a way that differentiates them from anyone else.


Scott Boras is an American Baseball sports agent. His company has 175 professional baseball clients. Basically his job is to find talent and sell their value to a team.

I, Kirk Jaffe, am a mortgage officer in Sherman Oaks, California. I have over 120 home-owner clients, and my job is to position their value to a bank. Scott and I both begin with the merit of our client to a bigger organization.

It’s time for you to go pro.

Factor #2: The Lender

Every lender has criteria for choosing and accepting a loan applicant. Those criteria change between each lender. Think of it like a formula or algorithm that takes in the information you submit and offers a response of accepted or rejected.

Some lenders place more value on payment history than they do credit.

Other lenders place more value on credit than they do total debt amount.

Which criterion holds more weight in regard to your acceptance changes with each lender. Therefore, the best way to get accepted is to submit your application to as many lenders as possible.

Having said that; the most important factor in getting your loan approved is by focusing on the first factor (you and your profile). As a loan officer, the majority of my work is invested in gaining the most accurate data up front from you. That way, when we submit applications, you’re in the best position to get approved.

Factor #3: The Market

The third and final factor that determines your mortgage interest rate is the general market itself.

Market data the impacts mortgage rates are things like: world events, politics, currency exchange rates, GDP (gross domestic product), and announcements made by the people at the Federal Reserve.

Make sure you keep your finger on the pulse of current events. When the people at the bank say, “Interest rates are going up or down,” doesn’t necessarily make it true. In order to make the most intelligent and informed decision when it’s best for you to get a mortgage, it’s important that you stay up-to-date with market conditions.


In this article I shared with you the three factors that determine your mortgage interest rate. They are you, the lender, and the market.

It’s important to remember the following points:

  • When you’re applying for a mortgage, make sure your file is accurate and as full with as much relevant data as you can possibly show. Focus on being absolutely transparent.
  • Every lender is different. Some lenders place more “loan-approval weight” on one factor within your file.
  • Stay up-to-date with current market conditions. *Consider getting access to the Residential Mortgage Guide here. It gives you step-by-step instructions on how to get approved for a home loan. Also, you’ll get email updates and tips from me about mortgage news.

Probably the most important thing to remember is this: you will always get approved for the mortgage rate you’re most qualified for. The key question you should be asking is not “where can I get the lowest rate?”

The best question is, “How can I make the best financial choice, given my current circumstances and goals?” If you’ll shift your focus, I guarantee you’ll make the most informed and smart choice for getting a home loan.

If you’d like a personal 15-minute “get approved consultation,” click this link and get access to my calendar.

Take care for now,

Kirk Jaffe