Anyone who’s been in the real estate sector for a bit knows that mortgage rates ebb and flow; however, there are certain steps you can take to always make sure you’re well-positioned to get the best deal possible within a given time period. Like most things, it’s all about preparation.
To this end, reputable online review/comparison site, mortgageloans.co says to always compare rates and loan terms for your short list. Additionally, what follows are some other actions you can take to secure the best loan available.
Ready Your Down Payment
You, frankly, shouldn’t even be thinking seriously about buying a home until you can manage a down payment of at least 3.5%. This is the cut-off mark for most mortgage lenders, in fact; if you can corral 20%, then you’re in a truly excellent position for both the short-term and long-term. Some private mortgage lenders go as low as 3%, so the options are available and conducive to helping you get that house you’ve always wanted.
Furthermore, there are all manner of federal, agricultural and rural development loans that are possible with even more beneficial terms.
Order Your Credit History
As you’re probably aware, the caliber of loans – of any type, be they care, mortgage, personal or other – you can command depends in large part on your creditworthiness. One of the primary benefits of getting your credit report is to scan it for mistakes; many of these, if they exist, can actually result in you bumping up your score if you get them fixed before applying for a mortgage loan.
The number the lender uses is similar to your FICO score, in fact, so paying down your various credit cards will result in a better debt-to-income ratio. Companies such as Capital One, Bank of America and Chase all report to the credit bureaus that deliver your credit history to lenders when an application process is initiated.
Here are some numbers for your edification: in order to get an FHA mortgage with the minimum down payment, you need a FICO score equivalent of about 580. The lower your score (there’s cut-off point, of course) the higher the necessary down payment. For non-government insured loans, the requisite scores are over a hundred points higher – so you can see how beneficial the former can be for people with less-than-stellar credit.
Build Up Your Savings as a Safety Net
This isn’t just important for your particular lifestyle; mortgage lenders, themselves, don’t really want to lend to someone who has to empty their savings account to take care of the down payment. What happens, after all, when you need some cash for life events? The last thing you want to do is miss housing payments to satisfy obligations – whether they’re unexpected ones or not.
Most lenders will assess how much you need to have in order to qualify for a mortgage – and if you don’t have enough, then you could be on the hook for mortgage insurance to help mitigate the risk the lender is taking by lending to someone with low cash reserves.
When you’re considering your home mortgage loan, try not to borrow more than you can truly afford. This is easy to assess by using an online loan calculator; you should not struggle to pay the monthly amount that results from the interest rate calculation. If you do then the house you want is not reasonably within reach of your current finances. Adjust your desires accordingly.
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