The rates that are quoted to you by a mortgage broker/banker are tiered at 1/8th (.125) pricing increments (i.e. 5.000, 5.125, 5.250, 5.375..) .
For example, let's assume you need $300K in financing on a standard 30Y loan. Assume that today the "rate sheet" of a particular lender shows the tier structure below. Note that if the percentage after the rate has brackets around it â€œ( )â€ it's the commission being offered by the Lender. Conversely, if there are no brackets itâ€™s the Wholesalerâ€™s fee to "buy down" the rate.:
Now, a loan broker/banker will typically earn at least 1% on a transaction. There are two ways for this to occur:
1) The loan broker has to select a rate where the lender pays the commission, or
2) The buyer pays the commission via points.
Using the example "rate sheet" above, this would result in you would receiving a 5.125% rate in the first case and a 4.625% rate in the second case along with a small additional lender fee of $243 [.081/100 x $300K ].
NOTE: this hypothetical pricing example is over-simplified. There can be many more price adjustments that must be accounted for such as LTV, credit score, etc. You can see an example of an actual Lender rate sheet here: http://docs.Steven-Anthony.com/SampleRateSheet.pdf
One other thing, you do have 3 credit scores and a lender will be using your "mid-score" for underwriting. If you are only pulling a single credit score you may be missing other items that are hurting your score that show on one or both of the other two credit reporting agencies.
Also, be aware that rates can change at ANY moment. If you are interested in what drives this see: