Mortgage rates have steadily climbed up for the past four weeks. With rates on the rise, mortgage applications have declined, according to the Mortgage Bankers Association’s Weekly Survey. Also, since the housing market crisis started, many mortgage lenders have tightened their loan requirement criteria making it more difficult for potential borrowers to qualify for home loans.
If you are a borrower looking to get a low interest rate mortgage loan in today’s tight market, it is important to prepare yourself and have the best possible profile to make sure you get one of the best mortgage rates available.
The first step towards buying a house is to know what you are looking for in terms of the kind of house you want to buy, its location, and above all whether you are ready to handle the commitment of being a homeowner. Purchasing a house is one of the biggest financial decisions for many of us as well as a big commitment. Therefore, it requires a lot of planning, shopping for rates and comparing them to make sure you get one of the best rates available.
The first step towards getting a low interest rate mortgage loan is to shop for mortgage rates. There are many banks and mortgage lenders out in the market and most of them have websites where their latest mortgage rates are posted. The internet has made it convenient and easy for borrowers to obtain mortgage quotes from various lenders and compare them. Do not settle with the first bank or lender you speak with. Get as many quotes you can and keep track of them so that it can help you narrow your search in getting a low mortgage rate.
Even before you start shopping for mortgage rates make sure your credit report is in good standing. Credit scores are an important factor that play into getting a low interest rate mortgage loan and usually the first thing lenders check. Therefore make sure all the information in your credit report is correct and there are no misinformations. If you have any questions on your report, you can always call the credit bureau to correct the mistakes and straighten out your credit report. You can also get a free copy of your credit report at annualcreditreport.com
Pay your credit card and other bills in time. This helps to maintain a good credit standing. All payments made on time as well as any late payments are reported in your credit history. Lenders look at your credit history to find payment patterns and determine whether you are someone who is responsible and who will make their mortgage payments in time. Late payments can be a red flag to a lender indicating you are a higher risk borrower. You may have to pay a higher mortgage rate or might not even qualify for a home loan.
In addition, having a low loan to value ratio can help borrowers get a low mortgage loan. LTV is the ratio between the total amount borrowed and the price of the home. It helps lenders determine that they are not lending more than the value of the house. Therefore saving for a good sized down payment can help borrowers get a low mortgage rate. Most lenders require a 20% down payment. If the down payment is less than 20%, they may require borrowers to pay private mortgage insurance, an added expense for the borrower. Loan-to-value ratios 80% or below are considered ideal, and borrowers with a low LTV have a better chance of getting a low interest rate mortgage loan.
There are many other factors that play a role in getting a low interest rate and depend on each individual borrower.
Currently, Total Mortgage is offering some of the lowest mortgage rates in the country. For more information on our current mortgage rate and mortgage products, please call 877-868-2503 to speak with a mortgage expert.