In the good old days, a buyer called a lender, gave him income, debts and permission to pull what we call an “in file” credit report, and the deed was done. A pre-qualification letter was sent out and promises made about great interest rates. The buyer then found a house, checked around with some different lenders – sometimes after the contract was accepted – to see who had the lowest rate.
Interest rates used to be the same for everyone who was looking for the same type of loan. In other words, when you talked to a loan officer about the interest rate for a 5% down payment, 30 year fixed rate loan, you got the same interest rate as everyone else looking for the same loan.
Now the lender needs to know your credit score as well. If you go to bankrate.com and search on mortgage interest rates, you’ll see a place to put in your credit score and your expected down payment. So if a lender quotes you a rate over the phone without discussing your credit score, he’s likely giving you the lowest rate reserved for the very best credit scores.
It is important enough to repeat – Your interest rate is credit-score driven, followed by your down payment and how long you need the interest rate to be guaranteed.
I wrote a little more specifically on credit scores here.