When prospective buyers are shopping for the perfect loan, one of the top questions is wondering what kind of mortgage rate they will qualify for. Mortgage rates can have a major impact on the terms of any loan, yet many homeowners are in the dark about what factors influence the rate for which they qualify. Don’t wait to hear from your lender when you could take initiative today and potentially improve your mortgage rate.
This is the big kahuna of mortgage shopping. Apply for any type of loan and the lenders will undoubtedly be interested in your borrowing history and credit score. Credit scores are an overall analysis of your creditworthiness based mainly on:
Make sure you take time to improve your credit score before applying to lending agencies if you want to qualify for a better mortgage rate.
Let’s say you have a big hunk of cash set aside for the down payment on a house. This can actually go a long way to improving the interest rate on your mortgage. Why? Lenders like to see an upfront investment in the loan.
There are two main types of loans – adjustable rate mortgage and fixed mortgage. A fixed rate loan comes with an interest rate that doesn’t fluctuate over time, whereas, an ARM will typically start out with lower interest rates and eventually shift into terms that demand higher payments. If you need a break in the beginning on your loan interest, consider investing in a mortgage structure that’s designed to do just that.