Lenders structure their rate tables to account for the perceived risk in making a loan to a borrower in a particular financial situation.  The higher the percieved risk, the higher the rate.  So the rate you are offered will be defined by your individual financial situation.  Until a lender can carefully evaluate the following criteria for you, please note that quoted rates are merely non-binding starting points.  The main drivers that affect YOUR rate are:

• Credit Scores
• Credit History
• Income Analysis
• Equity in your Home

Credit Scores
Credit scores offer the best indication to lenders of your past credit worthiness.  There are three national credit bureaus that most lenders will use:  Experian, Equifax, and TransUnion.  Each of the credit bureaus uses a scoring model to come up with a credit score sometimes referred to as a "FICO Score".  While each loan program may classify these ranges differently, this chart will help you get a feel for your credit scores:

Score Range	General Rating
700 and Higher	Excellent
670 - 700	Above Average
640 - 670	Average
600 - 640	Below Average
600 and Below	Needs Improvement

Higher credit scores are perceived by lenders to accompany lower risk and a lesser chance of default.  Thus, borrowers with higher credit scores qualify for better interest rates.

Credit History
Other factors of your credit history will also affect your rate.  All loan programs will have guidelines with respect to past bankruptcies, foreclosures, credit counseling, collections, late payments, and other adverse credit situations.  A credit report showing major adverse credit will not allow you to qualify for the best loan programs at the best rates.  Adverse credit history may also force the lender to add incrementally to the rate in order to offer the loan.

Income Analysis
A lender will always want to evaluate your proposed Debt-To-Income (DTI) Ratio or Debt Service Ratio (DSR).  This ratio will determine the percentage of debt payments you make on a monthly basis as compared to your monthly gross (before tax) income.  Maximum DTI allowed will range by loan program and can even be affected by your credit score or the presence of adverse credit.  Generally, lenders like to see your DTI less than 50%.  This means that the total of all your monthly payments for your mortgages, property taxes, homeowner's insurance, homeowner's association dues, and any minimum monthly payments on other loans and credit cards can not exceed 50% of your gross income. 

Home Equity
Your eligibility for certain loan programs as well the interest rates within those programs could also be influenced by the amount of equity you have in your home.  As another gauge of risk Lenders will look at the amount of equity you have in your home against the amount of money you are borrowing.  Consider the example where you needed to borrow $60,000 on a first mortgage refinance to pay off your existing loan.  If the appraised value of your home came in at $100,000, this would mean that you have home equity worth $40,000 or 40% ($40,000 / $100,000).  From the Lender's perspective, the higher your percentage of home equity, the lower the risk.  The reasoning is that borrowers are less likely to default or "walk away" on a loan obligation when they have a higher equity stake in the property.  This is because the borrower risks losing the built up equity in a loan default.  If the equity level is not very high, then a borrower may more easily decide to default and lose their small equity stake.  The lender in turn will hedge the additional risk with increased rates for loans on properties with little owner equity.