When buying a home it goes without saying that getting the best possible mortgage rate is always the main objective in terms of financing. This is totally understandable especially considering the fact that just a few fractions of a percentage point can easily result in thousands of dollars in added expense over the term of the loan. Here are some straightforward and easy ways of getting the best mortgage rate when you are ready to buy.
For example, the first step would clearly be to increase your credit score as much as possible. Mortgage lenders will look at credit scores to determine overall creditworthiness. In most cases any score above 700 is considered highly competitive when trying to secure reasonable home mortgage rates. However, even with scores below 700 there are creative ways of getting a good deal on a mortgage. Talk with your mortgage professional or broker to find out what programs are specifically available to you in this regard.
Debt To Income Ratio
As a note, most credit experts recommend avoiding opening new credit accounts six months prior to submitting a mortgage application. Equally important is to improve what is known as your debt-to-income ratio. In short, this is the portion of your income that goes towards paying off debt as compared to how much total money comes in each month. In most situations, a debt-to-income ratio should not be more than around 36%. Improving debt-to-income ratios is an important aspect of getting the best possible lending rate. Another smart way of securing a good rate on a mortgage is to consider a short-term 15-year mortgage. These types of mortgages can net an interest rate as much as one full percentage point lower than the 30-year loan product.
Paying For Points
Finally, some homeowners may consider the option of paying for points. In essence, a lender can offer a lower mortgage interest rate if they are able to collect a percentage of the money up front. In most cases each point is equal to around 1% of the borrowed amount. The more points that are purchased, the lower the interest rate becomes. Keep in mind that the longer a homebuyer plans to keep the loan, the more sense it makes to pay for points. Contact Realestateinanacortes.com for the best in Anacortes homes for sale and real estate in Oak Harbor Washington. Nicole Haun is a professional Washington State realtor with a commitment to outstanding quality customer service and satisfaction. Call today to learn more!
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