If you are planning to buy a home for sale in Waukesha County, you are probably thinking of getting a mortgage.
Home buying costs quite a bit, and if you are like many Americans, you will need to get a mortgage because your savings are not enough to get you the home you desire.
What is a mortgage rate?
When you get a home loan, the bank lends you the principal amount, plus a certain amount of interest. That is the mortgage rate.
Your mortgage rate may not seem like a big deal initially, but when you sit down and compute that amount over the duration of the time of payment for the home loan, you’ll see it's a lot of money.
That .5% increase means you’ll be paying hundreds of dollars more.
That’s why you need to shop for the best mortgage and the best mortgage rates.
The lowdown on mortgage rates
Different banks offer different mortgage rates. When you see a bank offering a 3.5% mortgage rate, don’t assume that’s the mortgage rate you’re going to get if you apply for a loan in that bank.
That’s not the way mortgages work. It’s not a one size fits all type of interest rate.
How do banks or lenders determine your mortgage rate?
Your Waukesha home interest rate depends on several factors. These factors have an impact on your financial worthiness and capability. Here are some factors that determine your mortgage interest rate:
1. Credit scores. That three-digit number has a large influence on your life. It determines whether you'll receive a high interest rate or a lower interest rate.
What is a good credit score that can motivate the lender to offer you a low interest rate? A credit score of at least 620. The higher your credit score is, the lower your interest rate.
On the other hand, the lower your score is, the higher the interest rate offered. Lenders do this because they want to be able to recoup their investment in the soonest time possible. If your credit score is poor, it shows you probably need to improve your spending habits.
2. Loan amount. Lenders assess the market value of the Waukesha home for sale that you want to buy and the closing costs that come with it. They will then deduct your down payment from the total amount. The remaining balance will become your mortgage loan.
3. Debt-to-income ratio. This factor tells the lender if you are ready and eligible for a mortgage. It measures how much your monthly debt is related to the size of your monthly payments.
Ideally, the maximum debt-to-income ratio you have for you to qualify for a mortgage is from 36-43%.
4. The type of property you will purchase. Are you buying a single-family home, an apartment, a townhouse, or a condo? Each type of housing comes with different considerations, which also changes the mortgage rate.
Tips to find the best mortgage rate
Now that you know what factors the bank looks at when deciding your mortgage interest, the next question is, how can you get the best interest rate?
1. Improve your credit score. Get a free credit score report from any of the three credit reporting agencies — Experian, Equifax®, and TransUnion®. If your credit score is lower than 620, make the needed change to get your financial life in order so your credit score will improve.
2. Proof of employment. Showing the bank you have a steady source of income and that it's from the same employer. They will also want to see your tax returns, pay stubs, and W-2s.
3. Save money for your down payment. When you want a lower mortgage rate, make sure that you can put down 20% of the purchase price.
4. Shop around. You want the best deal for the best price. Don't go signing anything without a careful consideration of the different interest rates the various banks offer.
Getting the best mortgage rate is one of the best things you can do when buying a home for sale in Waukesha.
Planning to buy a home soon? Let’s talk about needs and wants. Call me, Kristin Johnston, at 414-254-6647.
In case you can not view this video here, please click the link below to view How to Get the Best Mortgage Rate for Your Waukesha WI Home on my YouTube channel: https://www.youtube.com/watch?v=0_DvwIDdQTo&index=30&list=PLuFipRHseE_yh_POwwUQrjDP5CXqCBgt9&t=0s.