Loan rates depend on many factors outside of market rates. Your credit
score, the propertys value, and company policies all affect what you
will pay for your mortgage. With so many variables, you can get a better
loan rate with some careful research.
Revaluate Your Credit Profile
There are many factors that influence your credit score besides payment
history. Income, assets, and debt to income ratio are important to
lenders. So even with a recent foreclosure, a high level of cash assets
could qualify you for a decent rate.
Lending companies dont automatically use the FICO score to rank your
loan application. The financing company may use there own standards or
allow loan officers to make decisions. This is where a letter in your
credit report explaining extenuating circumstances, such as a job loss or
illness, can help. Just be prepared to verify the information if the
lender asks.
Take A Close Look At Your Property
Your propertys value can also affect your rates. A property in an area
with a proven history of increasing home values is easier to qualify
for low rates.
Conventional loans, those sponsored by government entities such as
Fannie Mae, have lower rates with their loan caps. Larger loans, also known
as jumbo loans, will have higher rates.
Improve Your Down Payment
A large down payment can also improve your rates. 20% is a good
starting figure, but more is better. Right after a bankruptcy, you may have to
put up as much as 50% to secure a loan.
Select Adjustable Rates
Adjustable rate mortgages also offer low rates, at least initially.
Usually you will have one to seven years with a low fixed rate. This low
payment will help you to qualify to borrow more.
However, after your initial period, mortgage rates will rise and fall
based on a specified market index. Caps will offer you some protection
from drastic increases in payments. You may also have the option to
refinance to lock in low rates.
Take the time to read about rates and terms. Ask for lots of quotes and
play with changes in terms to improve your rates.
Carrie Reeder is the owner of ABC Loan Guide, an informational website about
various types of loans.
View her recommended lenders for
Poor Credit Mortgage Loans.
