Today, everyone’s interested in how to get the best deal on a mortgage loan. The interest rate a borrower receives can either make or break a mortgage deal. Qualifying for a low rate mortgage loan reduces monthly payments, in which borrowers can afford a more expensive property. On the other hand, acquiring a higher rate can increase payments and limit a borrower’s buying power.
Here are a few tips to help you qualify for a low interest home loan, and keep your payments affordable.
- Order a Copy of Your Credit Report
What’s your credit score? 500? 600? 750? Every homebuyer should know their personal score before applying for a home loan. Lenders take many factors into account. It doesn’t matter how much money you have in the bank, or whether you have every intention of paying your mortgage. If you have a low credit score and a shaky payment history, you won’t receive a low rate.
Now that you know your personal score, it’s time to make improvements. It doesn’t take much to raise a low credit score. Paying your bills on time and reducing your total debts can boost your score by 30 to 50 points within a couple of months. The higher your credit score…the better. What’s more, lenders prefer applicants with a low debt to income ratio. Regardless of whether a person has a blemish-free payment history, lenders frown upon excessive debt; and these applicants receive a higher rate.
Once you’ve examined your credit report and you’ve taken steps to improve your score, it’s time to find a mortgage lender and a loan program. Various loans are available, and there’s a mortgage for everyone. Thus, it’s important to compare different loan programs and choose the one that’s right for you. Talk with a broker and discuss your options. Do you need a fixed rate mortgage; 100% financing; or perhaps a 40-year mortgage loan? Brokers compile mortgage quotes from reputable lenders and present these to borrowers.