The difference in the interest rates and associated loan rates for the borrowers will largely be due to the lending institution. Underwriting teams are designed to remain in compliance with all lending practices and fair credit guidelines, as well as to reduce risk associated with lending money. For example, if underwriting discovers that a borrower was 29 days late on an account within the past few months, they may assign a higher interest. The rationale behind higher interest rates is not to punish the borrower, but rather as insurance for the lender. Higher interest rates ensure that the lender receives a greater proportion of the monthly payments in the event of future default. Closing fees are fairly standard among lenders and generally include a percentage of the amount borrowed. Loan application fees and administrative costs will vary greatly among lending institutions as well.
