We don’t want the best rate when applying for home loan but are there ways to get a better rate than someone else? Here are four steps to getting the best rate when applying for home loan or mortgage.
This is one of the most important things that a lender looks at to determine their risk for loaning you money. They want to make sure that you’ll pay it back and your credit score give them a snapshot into your past history I’m paying your bills on time. If your credit score is lower than about 740 you might spend the next six months increasing that rank to get a better rating. Credit scores run from 300 to 850 and of course, the higher the better. Paying all of your bills on time, paying over the minimum amount on any credit cards or loans, and getting a free copy of your credit history and correcting any mistakes are all great steps to increasing your credit score.
Having a low debt to income ratio.
If you’re debt is 40% or less of your income you look better to potential lenders benefits higher. Those that are spending 50% of their monthly income just on paying off debt means you may not be the best candidate for home loan. Consider how much you make and then how much of your income goes to paying off debts and loans. Try to keep that number under 40%.
Have job stability.
If you’ve remained at the same job for at least two years it shows that you are a little more dedicated and responsible than someone that changes jobs every couple of months. Try to stick with the job or at least the same line of work for as long as you can.
Have access and liquid funds set aside or in a reserve.
If lenders feel that you are using every penny possible to purchase a home you may not have any extra should emergencies arise. If the home needs repairs or any major renovations in the future to maintain the value and you don’t have the funds available this may be considered a higher risk for lenders. Try to set aside a reserve fund that would cover you for 2 to 3 months should you lose your job or simply needed emergency. This also shows lenders that you are lower risk and it may offer you a better interest rate.
For more information on increasing your credit score and getting the best rate possible for your next home loan call me today and let’s set some specifics on your situation.
Your Mortgage Specialist
Whether you are applying for a mortgage, refinancing your current home, want to learn about the mortgage process or need to find out information about your credit history, our website gives you all the information you need to make an informed decision about your financial future. Contact us today for a personal touch to your mortgage and financial application and where to get a mortgage.