Qualifying for the best mortgage rate can save you tens of thousand dollars through the loan’s life. It is necessary to understand your lender’s needs and be sure to fulfill them to enjoy a better deal.
Mortgage lenders are in the business of lending money and losing out on their investment is not an option. You must prove to your lender you can service your loan before they can approve your mortgage application. Good credit history with a stable income guarantees a lower interest rate with fast approval.
Poor credit ratings lead to higher interest rates or disqualification. Before making your application, Primary Residential Mortgage, Inc. Fort Myers notes that it’s important to understand the mortgage process. That way you can eliminate any shortcomings on your application and improve your chances of qualifying for an affordable mortgage.
Boost your credit score
A good credit score is a vote of confidence in the eyes of the lenders and it propels your application to the top of the pile. It also guarantees you a lower interest rate. Lenders like dealing with good debtors because they pose a minimal risk to their money. Your credit score reflects how you handle your finances.
Paying your bills and debts dutifully raises your credit ratings and improves your creditworthiness. Poor money habits lead to poor credit rating and attract higher interest rates or disqualification. A score above 700 is good but if you’re looking for the best rates, aim to keep it above 760.
Raise a sizeable down payment
While lenders are happy to accept your business, they are far more appreciative if you can pull your weight when buying a home. Experts recommend that you have at least 20 percent down when purchasing a home. Borrowing more than 80 percent of the home marks you a high-risk borrower, and that’s when the private mortgage insurance kicks in.
The PMI raises your monthly installments, but the money doesn’t count towards buying equity on the home. The size of your deposit also determines the interest rates on the home loan. Anything lowers than 20 percent leads to higher rates. A sizeable deposit marks you as a serious home buyer, and you get to enjoy lower interest rates.
Kicking your finances into shape is the best way to ensure a smooth mortgage application process. You stand a higher chance of qualifying for a mortgage if a lender is happy with your financial history and conduct.