Apr 11
2
Image by uncene via Flickr
When it comes to qualifying for the best mortgage rate, you need to understand how lenders determine the interest rate they will charge each individual. At one time, you would go to your local bank and borrow from them. They knew you and determined the interest rate based on that relationship, as well as local lending information. They would hold that mortgage until you paid it off. Today, that is very unlikely to happen. Even if you borrow the money at a local bank, they do not use local data to determine mortgage rates. They look at what lenders are typically charging for your type of loan on that particular day. For instance, if you want a 30-year fixed rate, they look at the base rate for that type of loan. That is where they start.
Each individual comes to the lending table with a different situation. Mortgage lenders will look at your particular situation and adjust that basic rate accordingly. If you have good credit, it will count in your favor with a lower interest rate. If you have blemishes on your credit report, you will pay in a higher interest rate. If you do not have a large down payment for the house, they are lending a higher amount of the home’s value. That counts as higher risk for them and a higher interest rate for you. Lenders also look at your current job and salary levels. All of these factors go into determining the best mortgage rate you can get.
So, after all the calculations, the lender will present you with a mortgage rate. You may find it is higher than the advertised rates you have seen in the newspaper. What can you do? The first question is to the lender. Why are they offering you the higher rate? The next question is which lender you can speak with next. Many people think they will get the same mortgage rate with every lender. And that is far from the truth. When considering a mortgage, look to other lenders and see if that is the best mortgage rate for which you qualify.
The best mortgage rate you can get is what a lender will give you based on your circumstances. The lowest rates go to those with perfect credit, a large down payment, and income galore. But, you can get a lower rate if you shop around before signing on the dotted line.
View the original article here
Related articles
- What the Mortgage Meltdown Might Mean to College Students (distance-education.org)
- 30-year fixed-rate mortgage rises for second week (marketwatch.com)
- Adjustable-Rate Mortgages Gain Steam Again (tprescottrealestate.wordpress.com)
- Mortgage rates edge up, but still under 5 percent (oregonlive.com)
- Warning as mortgage defaults rise (independent.co.uk)
