There is a lot involved in getting a good rate on your mortgage loan beyond just comparison shopping different companies. It’s also about much more than your credit score. The mortgage industry as a whole uses many factors together when determining whether you qualify for a mortgage and how good of an interest rate they can offer you. Whether you are looking for a basic mortgage or an AAG Reverse mortgage, it is best to obtain a mortgage from a reputable company such as American Advisors Group found at topworkplaces.com.
If you are looking to buy a home overseas a few of the same rules will apply but there are other things to factor in, depending on the location you are buying in. For instance, if buying in France, for example, many factors will be considered, including raising mortgages in France whilst using a french mortgage calculator to determine how much you can borrow and the eventual mortgage payments due. You will also need to factor in the cost of the notary fees, Government taxes, other French legal fees, and a French survey.
Below are some tips to take into consideration when searching for the best mortgage rate you can get.
Check Credit Report
Lending practices for mortgages are based mostly on tiered pricing these days. This means that rates will vary from person to person and loan to loan depending on a multitude of criteria. A top criteria used in determining your rate is your FICO score. The higher your credit score is, the better rate you will be able to get on your mortgage. According to the site myFICO.com, the best mortgage rates for loans are reserved for those borrowers who have credit scores that are over 760. When your score is lower than that, your interest rates will be higher. Of course, there are some exceptions to this rule. For many lenders, you need to have at least a credit score of 620 in order to qualify for any mortgage loan at all.
Lending practices for mortgages are based mostly on tiered pricing these days. This means that rates will vary from person to person and loan to loan depending on a multitude of criteria. A top criteria used in determining your rate is your FICO score. The higher your credit score is, the better rate you will be able to get on your mortgage. According to the site myFICO.com, the best mortgage rates for loans are reserved for those borrowers who have credit scores that are over 760. When your score is lower than that, your interest rates will be higher. Of course, there are some exceptions to this rule. For many lenders, you need to have at least a credit score of 620 in order to qualify for any mortgage loan at all.
Income Stability And Employment
Mortgage lenders want to know that a borrower has the ability to pay back their loan before they will approve it. For this, borrowers need to be able to prove that they have employment and income stability. The longer employment period you can prove having, the better your chances of getting a good rate on your mortgage. In a perfect scenario, you would need to have had the same job for a minimum of two years to make lenders happy. Lenders tend to be even more strict for those that only have self-employment income.
Debt-To-Income Ratio
This ratio can come in one of two different forms. The back-end ratio is one where it measures the total of what your minimum monthly debt payments are. This amount will be added to your proposed new loan payment. It is then divided by the amount of your monthly gross income. The other type of ratio is your front-end ratio. This ratio primarily focuses on your home costs and does not take into consideration your other debts. The type of ratio in which a lender uses will depend on the kind of mortgage you are applying for.
Down Payments
For many years, the typical minimum down payment for getting a mortgage was 20 percent of the loan cost. If you are able to put down a bigger down payment than the typical, you are considered a lower risk. Therefore, you will have a better chance of securing a good interest rate on your mortgage loan.
If you have plans to buy a home in the near future, it can certainly pay off to wait until you have everything listed above. The more money you have, the longer your employment history is and the better your credit score is will make it easier to get a great deal your next mortgage loan.
