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  Many home buyers want to "shop" interest rates, so they call up lenders or look at web sites and their main question is, "what is your interest rate today?"

  The real answer is, "it depends."

  You see, lenders don't have just one interest rate.  They have an entire menu of interest rates.

  To quote you a rate, the lender needs to know several things.  First, he needs to know if you are buying or refinancing.

  If you are buying a home, the lender needs to know how much you will be putting down and what percentage of the purchase price the down payment will cover.  He needs to know what loan program you are interested in, whether you have a strong credit history or not, whether you want to document your income and savings or want an "easy qualifier" loan.  This list of variables does go on.

  However, you still want a rate quote because you're "shopping" for a loan.  The lender still needs to know approximately how many "points" you want to pay.  A point is one percent of the loan amount.

  Here is why the lender needs that information.

  Say you are willing to pay one point as a loan origination fee on a 30-year fixed rate loan -- today your interest rate might be 5.75%.  If you wanted to pay zero points, your interest rate would probably be six percent.

  On the very same day, you could also get an interest rate of 4.75%.  That would cost approximately five points or more.  If you're going to own the home for 30 years and never refinance, that could actually make a lot of sense.

  The point is -- there is no ONE interest rate.

  There are a variety of interest rates.  When you get an interest rate quote from a lender, he is just providing you with one option among an entire menu of choices.

  Then tomorrow, it all changes.  Rates change every day - sometimes a lot, sometimes a little.  When the investment markets are volatile, interest rates can change several times in a day.

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