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How does loan size affect loan rates that bank charges on consumer loan?
Wiki User
∙ 12y ago
You are looking at few possible scenarios.
Conforming Loan (Up to $417,000 on a 1 unit and higher loan amounts on 2-4 units) - rates on conforming loans are the lowest, except for the smaller loan amounts. Some banks may impose additional charges on loans under $150K or under $100K. If you are getting into smaller loan amounts, you should expect to pay higher interest rate or fees.
Hi Balance-conforming (Up to $625,500 on a 1 unit) - most of these loans are still sold to Fannie Mae or Freddie Mac by the banks, but the rates on these loans are slightly higher than on the loans up to $417K.
Jumbo Loans - Anything above $625,500 is considered a Jumbo loan, except for FHA loans (max. loan limit $729K) or 2-4 units. If it's a Jumbo loan, you are looking at higher rates and different loan programs. These loans are not sold to Fannie Mae or Freddie Mac; these loans are sold as a pool to other institutional investors that have their own guidelines and fees. Rates on these loans are typically higher. It is typical to get much better rates on Adjustable Rate Mortgage (ARM) instead of a 30 year fixed rate mortgage.
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∙ 12y ago
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