How Do You Qualify for the Best Mortgage Rate?
The worst mistake of borrowers when shopping for a home loan in Utah, Arizona, or anywhere in America is to search for the best mortgage rate. First of all, the “best rate” is relative, as what you consider best may not suit the financial situation of others. Second, most have the wrong criteria when judging the favorability of interest rates. For instance, many deem low rates attractive, but they don’t necessarily help you save in the long run; some involve fees that ultimately make your mortgage costlier than you initially think.
Instead of looking for the lowest figure on the rate sheet, making yourself the “best borrower” is actually an excellent way to secure a favorable deal. Good credentials, American Loans reveals, are always effective bargaining chips in any home loan negotiation.
How to make yourself irresistible to lenders? Most mortgage providers would die to get your business if you have all of the following:
Good Credit Score
If you’re the lender, you’d want to know the credit score and look at the history of your borrower before you lend hundreds or thousands of dollars. Even if some put less weight on credit-worthiness, this aspect of your resume would give your lender an idea how much risk they are taking to do business with you.
By all means, check if your credit file is error-free to ensure your score is accurate and be qualified to as many home loans as possible.
Low Debt-to-Income Ratio
Having a low debt-to-income ratio is one way to tell lenders you can effectively manage your monthly mortgage repayments. Needless to say, most home loan providers have more confidence in lending borrowers with a loose budget because they have more than sufficient money to repay a mortgage debt.
If you’re not yet done repay your credit card bills, or other types of debt, it’s advisable for you to pay them off first before you apply for a mortgage.
Large Down Payment
Putting down more than 10% of the overall purchase price of the property is a win-win situation. A huge deposit shows your lender that you’re serious about your mortgage application, thus giving them assurance that you’re financially capable of the responsibility. On your part, the more pay upfront, the less you have to pay with interest over time.
Having all these three may seem too ideal to be realistic. But if you’re persistent and self-disciplined enough, you can own a set of credentials no mortgage lender would dare to say no.