How to Go About Getting the Lowest Mortgage Rates Possible

How To Go About Getting The Lowest Mortgage Rates Possible

With the New Year here and the housing market back on the rise many people have aspirations of purchasing a home. Maybe this will be their first home or maybe they are looking for a vacation home. Whatever the situation is, with the decline last year many people have less than stellar credit and probably aren’t currently cashing in the biggest paycheck possible. This can make acquiring a mortgage extremely difficult, this is especially true is the rates are just more than you can afford. So, how exactly do you go about acquiring the lowest mortgage rates possible? Below, that is exactly what you are going to learn.

Understanding Credit Scores

The first and most important thing that you need to know about mortgages today is that the rates are all based on various criteria. Of course, the biggest consideration is going to be your credit score. If your credit score is good you are going to get great rates. However, if you score is less than stellar your rates are going to be high. If you want to make sure that you are getting the best rates possible you need to immediately monitor and examine your credit score before you even start applying for a mortgage. There are several different websites online were you can get a free credit report. Once you receive your report make sure that you completely examine it and check it for errors or incorrect information.

You would be truly surprised to learn how many errors and unreported payments leave individuals stuck with bad credit. In addition to this, if you are late or behind on payments you can possibly contact those creditors, work out some kind of payment plan, and get them to take the lien off your credit.

Consider Working With A Smaller Firm

With the housing market making a big comeback, more and more individuals are getting into the mortgage industry. When you are looking for a lender you will without a doubt discover tons of large companies that are willing to give you a loan. However, these larger companies work with tons of people and businesses on a daily basis, so one individual or single family might not be this firm’s biggest priority. This is why it sometimes pays to work with private mortgage lenders Toronto. Not only will you get one-on-one personalized assistance, but also the whole process will seem more personal.

Providing A Stable Income

Mortgage lenders love to see candidates that can prove that they have steady and reliable income. If you have held the same job for more than two years this is going to bode much better for you than having long spans of unemployment on your employment history. If you have just started a new job or have long gaps of unemployment history on your background, where your spouse has held the same job for the past 5 years, you might want to consider putting the mortgage in your spouse’s name. With that being said, if you are self-employed you are going to be placed in a whole different bracket. When it comes to mortgage lending self-employed individuals often time face more strenuous and strict bylaws. Just make sure that you have at least two years of your previous income statements prepared and ready to present to your agent.

Pay For Points

Many first-time homebuyers are not familiar with the phrase “paying for points.” A point is nothing more than an upfront fee that is paid to lower the interest rate by a fixed amount, which is typically 0.125 percent. By paying for points, it is possible to lower your ongoing interest rate significantly. For instance, if you take out a loan for $200,000 at 4.25% interest and pay a $2,000 upfront fee, you could lower the interest rate to 4.125%. Of course, this is not the case with every loan, but it is an option that is worth delving into.

Paying for points works great for individuals who are planning to keep their loan for an extended period of time. If you plan on living in your home for nine years or longer, the upfront fees could very well outweigh the interest rate savings.

Qualifying For Special Programs

If you qualify for a special program, such as a VA loan, first-time homebuyer or FHA Loan, you may be possible to lower your interest rate and mortgage payments. Be sure to research these programs, before applying for a mortgage.