5 Tips to Get a Better Rate on Your Mortgage
It is no secret that mortgage rates are at an all-time low.
The prospect of having a 3.79% rate for a 30-year fixed mortgage or a 3.04% rate for a 15-year fixed mortgage rate, sounds almost too good to be true.
However, these are the latest reported figures released by Bankrate.com. With rates this low, you would think that the housing market would be in a self-healing trend. Instead, many homeowners have to sit and watch as the carrot of opportunity is dangled in front of their noses, the sad result of yesterday’s actions.
Being denied for a home refinance loan can leave you with nothing more than the hint of a stronger mortgage. Here are 5 tips that can lead you to the lowest mortgage rates ever.
1. Know Your Credit Score
Being oblivious to your credit score is the number one mistake that home owners make. Perhaps you have always paid your bills on time and are careful not to overcharge on credit cards, but in today’s climate, this is not enough.
In order to have a premier credit score and qualify for the best mortgage rates, you have to be diligent. Sign up to receive a copy of your credit rating quarterly and watch your credit score closely. You may be surprised to learn that the three credit reporting agencies are giving inaccurate information to lenders. Take steps to repair the errors, pay more than the minimum balance due on charge cards, and never be late on your mortgage payment.
2. Put that New Car on Hold
Making a large purchase within months of applying for a home refinance will set off red flags to potential lenders. Suddenly, your debt to income ratio changes, your ability to pay back a new loan is questioned plus your sincerity for understanding the privilege is questioned. Work on one or the other but never at the same time. A vehicle that is paid off is much more attractive than a new car with an unsecured loan and virtually no value.
3. Rethink a Career Change
This can be a downfall to many that have suffered from the downsizing of a company or have changed jobs in order to increase income. In order to reap attractive mortgage rates, lenders like to see at least two years of work history with the same employer. If you do find yourself out of work due to downsizing, try to find a compatible job with little change in income. Save the career change for later.
4. Beware of Last Minute Credit Checks
You have done your homework, applied and been approved for the lowest of mortgage rates and are ready to celebrate. You sign the papers on that new vehicle and relax while your mortgage paperwork is being put together.
Suddenly, a phone call throws your life into turmoil because the mortgage company decided to run a last minute credit check. Always wait for your refinance to be completed, signed, sealed and delivered, before doing anything to affect your credit rating.
5. Expect Additional Fees
Put some money back for a home refinance, just in case there are extra fees to pay. Gaining approval for refinancing your home is great, but hearing that you need to pay $1200 in closing costs, can be a real let down. Prepare for the worst and hope for the best in extra fees.
It can be tough to be accepted for mortgage rates that strengthens the equity of your home, but not impossible. By constantly improving your credit score and planning ahead, you can benefit in today’s real estate market.