How can you qualify for a low mortgage rate? One way to make sure you qualify for the best rate you can is to check your credit report yourself well before you are ready to apply for a mortgage. This will give you an idea of what is on your credit report, what your credit scores are and what problems you may run into based on your credit. By obtaining a copy of your credit report early before you are ready to buy you can make sure there are no errors, inaccuracies or problems on your credit. If there are this will give you time to dispute errors and take care of these issues early on so that they do not slow down your mortgage application process nor affect you negatively. Checking your credit report 1-2 times per year is very important, especially with all of the identity theft issues going on in the world.
In order to qualify for the lowest rates you should understand what the interest rate represents to the lender. The interest rate is related to the risk the lender takes that you will not repay the loan. The riskier you are as a borrower the higher interest rate you will have. The lowest interest rates are for people with the best credit, people with equity in the property (down payment on purchases), and for people who can accurately document their ability to repay the loan with out difficulty (you have to document enough income to be able to afford the payments)
A quality mortgage consultant can help you evaluate your credit report. He or she will have tools and strategies they can provide you on how to ensure you are managing your credit in a way to have higher credit scores. Some of these strategies include how much of a balance to carry on credit cards, how many credit cards and other credit lines to have open and active, or perhaps having yourself added to another's card as an authorized user. Everyone's credit history is unique, so be sure to have a mortgage consultant review your credit report with you as part of the preapproval process.
You can qualify for a low mortgage rate if you have excellent credit and keep the loan amount you borrow at or below 80%. You will be able to get a low mortgage rate if you can provide full documentation. Reduced documentation and alternate documentation loans represent more risk so the loans come with higher rates.
The mortgage rate you qualify for depends on several factors one of which is years on the job. Different lenders will look at stability as a key factor to determine which loan program you qualify for. Talk to your mortgage broker about which is best for you.
Qualifying for a low interest rate mortgage can occur when the lender determines that your credit is good and you have a low risk of not repaying the loan. Improve your credit by checking for inaccuracies, making your payments on time and lower your outstanding debt balances.
Hybrid Arms are a good way to get into a low interst rate. Hybrid Arms are fixed for a number of years then start to adjust. If you plan on only stayig in your home a short time a Hybrid Arm mayb be right for you since you will get a much lower rate than a 30 year fixed rate.
Your Mortgage Rate and Borrowing Power is Based on 8 variables.
- Employment History
- Liquid Assets
- Credit Score(s)
- Loan Amount
- Income Documentation
- Debt-to-Income Ratio
- Bond & Security Rates
All of these factors will influence your Mortgage Rate.
To make sure you are qualifying for the lowest rate possible be sure and shop at least 2 different mortgage companies. Different companies may have different programs like FHA or VA that can help you get a great low rate even with troubled credit!
Having excess cash can allow a homeowner to buy down an interest rate, either temporarily or permanently. An important question to ask yourself is how long do you need to borrow the money. This will dictate if it makes sense to spend the extra money to buy down your interest rate.
If you are borrowing over 80% of the home value, you will likely need to carry mortgage insurance as part of your monthly payment. This fee typically drops off once you have obtained 20% equity in your home. You can usually choose to buy out the mortgage insurance, but this will often result in a higher interest rate. You will need to determine which option is better for you, based on your current needs and long-term plans. Your mortgage broker will be able to help you better understand all the variables involved.
The payment history on past mortgages will play a major role in the rate you qualify for. The past 12 months will have the greatest impact because it will show the lender how you have been able to handle your mortgage payments recently.
Qualifying for a low rate, or any rate, is solely dependent upon the lender that you choose. Some lenders have stricter requirements than others, even when the rate is the same! A licensed mortgage broker can help evaluate your situation and shop your loan to lenders that have requirements that you meet. This way, the rates you get quoted are rates that you are eligible for.