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ARE YOU GETTING THE MORTGAGE RATE THAT YOU DESERVE?
Here are a few ways in getting that low mortgage rate that you deserve.
When applying for a mortgage there are a few key tips that you might want to know to get you a better mortgage rate. By you getting a lower mortgage rate by a little as about one percent, can literally save you several thousands of dollars.
The first process is to understand and increase your credit score for a better mortgage rate. The credit score and credit report are a big part of the mortgage loan application process. Because we all know that lenders base your mortgage rate on your credit report scores. When applying for a mortgage from a lender and getting the best possible mortgage rate lenders will look at your credit report and your credit scores and base your mortgage rate on that.
Your credit report and credit score data is given from TransUnion, Experian, and Equifax, which will be used to calculate your mortgage rate which turns out to be about the middle score. Anything above 650 score on can get you a pretty decent mortgage rate. The higher your score is the better mortgage rate that you will receive.
If you find yourself to have a lower than a 650 score, there are few things that you can do quickly to raise your score and get a lower mortgage rate.
- Pay down your credit cards.
- Correct any negative discrepancies.
- Make your payments in a timely fashion.
- Keep your accounts active and current.
- Avoid any unnecessary inquiries.
Reviewing your credit report before you apply for any home mortgage can give you some needed extra time to ensure that you will be able to fix any discrepancies that can assist you in getting a lower mortgage rate. You will want to check your credit report and credit score at least three to six months before you start the mortgage loan process as this will give you ample time to fix and correct any discrepancies that either you found or your lender found.
There have been many times that potential borrows found out at closing time that there are a few debts that were never paid or that you are missing some important documentation. The three to six months prior to closing on your house will give you ample time to collect the proper documentation or pay a debt and be able to provide your lender with all of the proper documentation for your mortgage loan to be able to be processed. As you will soon find out that everything will need to be filled out completely, accurately, and provide all of the proper documentation that they require.
Downsizing your debts can greatly help you in getting the home that you have always wanted with the lowest possible mortgage rate. One of the things that your mortgage lender will look at is your debt to ratio income, which will be the determinating factor on how much you can afford your monthly mortgage payments to be. Remember that your credit card payments are factored into the equation, so now would be a good time to pay off those credit cards.
Using the debt to ratio income is calculated by dividing your monthly before taxes income into your monthly expenses. This means your student loans, car loans, credit card bill, and any other expenses that you regularly pay every month. All of this can also help you in getting a better mortgage rate which means a lower monthly mortgage payment.
Remember to pay any small loans and credit cards as this will assist you in getting a better mortgage rate and may increase in the amount that you are allowed to borrow.
And the last of the key element is to improve your loan to value ratio meaning your down payment on your house can help you with your loan to value ratio. The way that the loan to value is calculated would be the amount of the house that you are interested in divided by the amount of the mortgage that you would like to have.
Lenders truly are looking for borrowers that have a loan to value of over 20%, which that can help you in getting a lower mortgage rate. As most people have very little money to put down towards their new home, the average is about 5% down. There are even some people out there that find a lender with little or no money down and maybe promise a lower mortgage rate.
It is very common for the first time home buyers to be able to purchase a home with little or no money and even a low mortgage rate. If your loan to value is below 20% you could put more money towards your down payment or choose a house that is less expensive.
There are a few ways that can improve your chances in saving money on your home loan mortgage. By reducing your interest rate around 1% can really save you thousands of dollars during the duration of your home mortgage loan. There are several websites that can calculate what your monthly mortgage payment would be as this would allow you to know what your limit would be for your interest rate. As this calculates your monthly mortgage payment with the interest rate calculated into it. This is a great tool for you to use as a guideline of what to expected when you are looking for a mortgage loan.
So choosing the right lender, clean up your credit report, and do your homework this can all pay off to purchasing your dream home with a great mortgage rate. |
