fbpx
Laying the groundwork for the best mortgage
With mortgage rates having doubled what they were in early 2022, getting the lowest rate possible could mean the difference in being able to buy a home or at the very least, makes it much more affordable. Some people are waiting for rates to come down and while they are expected to come down some […]
Laying the groundwork for the best mortgage
With mortgage rates having doubled what they were in early 2022, getting the lowest rate possible could mean the difference in being able to buy a home or at the very least, makes it much more affordable. Some people are waiting for rates to come down and while they are expected to come down some […]

d074f5f7-32e5-4f1a-ac04-dc67739fc9e6.jpg

With mortgage rates having doubled what they were in early 2022, getting the lowest rate possible could mean the difference in being able to buy a home or at the very least, makes it much more affordable. Some people are waiting for rates to come down and while they are expected to come down some this year, most experts agree that they’ll never return to the three or even four percent range.

There are things that a buyer can do to be eligible for the best rate available. Obtaining the most favorable terms is based on the loan-to-value, your credit rating, and your ability to repay the mortgage.

While lenders can impose their own underwriting criteria, the basic qualifying guidelines are identified as the 4 Cs:

  • Capital – money and savings, plus other investments providing for down payment, closing costs, and reserves for unexpected expenses in the future. It could also include gifts from family members, grants, and down payment assistance.
  • Capacity – ability to pay back the loan. Lenders look at income, job stability, savings, monthly debt payments, and other obligations to approve a borrower for a mortgage. They’ll ask for several years of tax returns, W2s, and current pay stubs. Self-employed borrowers require additional documentation. Some of the recurring debt can include car payments, student loans, credit card payments, personal loans, child support, alimony, and other debts which could include co-signing for another’s debt.
  • Credit – your credit history and score exhibit your experience for paying bills and debts on time. While there are minimum credit scores for different types of mortgages, the best rates are only available to borrowers with the best credit scores. Credit ratings are established over time and borrowers need to improve their scores before they need to use them.
  • Collateral … lenders look to the value of the home and other possessions when pledged as security for the loan.

Based on the Ability-To-Repay Rule, effective 1/10/2014, financial information must be supplied and verified; borrower must have sufficient assets or income to pay back the loan; and, teaser rates can no longer hide a mortgage’s true cost. Even after a lender gives a loan approval to a borrower, they will generally run additional verifications a few days prior to the closing to make sure that nothing has changed that would affect their underwriting decision.

The financial preparation for homebuyers begins long before they start looking at homes. They need to be aware of their credit by asking for copies of their credit reports from the three major reporting agencies: Experian, TransUnion, and Equifax. Congress mandated consumers be provided this free service through AnnualCreditReport.com. Other websites may offer free services, but their real objective may be to encourage you to purchase additional services.

Once you’ve received the credit reports, read them to discover errors that could negatively affect your credit score. The website will tell you the process of correcting the errors which includes notifying both the credit bureau and the reporting party of the error.

Most borrowers understand that payment history is the major contributor to a credit score; it is expected of borrowers to pay on time and as agreed. Sometimes, borrowers are surprised to find out that if their borrowing approaches their available credit that it could actually hurt their score.

The credit utilization ratio is the percentage of credit used to that which is available. If you had $10,000 credit available and your balance of a credit card was $2,500, the ratio would be 25%. Ideally, lenders want your credit utilization to be below 25%. Again, this could be one of the things you work on before you meet with a mortgage officer.

Once you have an accurate credit report and have saved for the down payment and closing costs, you’re ready to meet with a trusted mortgage professional who can take you through the process of preapproval. They may be able to suggest things you can do to raise your credit score to be eligible for a lower mortgage rate.

All lenders are not the same and there is a significant difference with the online lenders who have limited counselling advice and working with a local mortgage officer you can discuss face-to-face what your situation is and if it can be improved.

You may feel comfortable with more than one recommendation and your agent will be able to supply you with lenders who they are familiar with from their experience in situations like yours.

LIST OF BLOGS

The Skinny on 1031 Exchange

The Skinny on 1031 Exchange A 1031 exchange refers to Section 1.1031 of the Internal Revenue Code which was passed in 1990. After the death of a 1031 Exchange that is no longer always the case. What kinds of Property Qualify? A 1031 Exchange enables sellers of some...

Realty Investment Trust

Property Investment Trust Realty Investment Trust: Enabling you to be a part of the celebration Genuine estate is a huge organization and everybody appears to desire to invest in genuine estate. There are stories about individuals who made $50000 in a fortnight by...

Do Not Become a Mortgage Industry Crisis Statistic

Do Not Become a Mortgage Industry Crisis Statistic It's obvious that the U.S. real estate marketing is having among its biggest downturns given that the early 1980s. Get a paper or switch on the news and you are swamped with a day-to-day report of more foreclosures,...

5 Things You Should Know Before You Flip A Property

5 Things You Should Know Before You Flip A Property When turning a home your cash is made at the purchase not at the sell of the home. Lots of times individuals purchase a home with the intensions of making a big revenue just to discover out that they might not make...

Tax Benefits Available through Investing in Rental Property

Tax Benefits Available through Investing in Rental Property If you currently own a home you might be rather familiar with numerous of the tax advantages used by owning rental home. By utilizing a home loan to acquire rental home you extremely well might be able to...

1031 Exchange Companies

1031 Exchange Companies The most convenient technique to start a 1031 Exchange deal is to get in touch with a great Exchange Company. The info worrying the exchanger, time and location of the closings, and a copy of the agreement to offer the given up residential or...

Is It Time To Buy A House?

Is It Time To Buy A House? At some point as you're composing out your lease check, you get to the point where you look at the quantity and believe to yourself - at this rate, I might BUY a home. If you're fed up with paying lease every month that's high enough to fund...

How to Sell Your House by Lease Options

How to Sell Your House by Lease Options Lots of people purchase a home then need to move within a couple of years, due to divorce, moving or monetary troubles. With no equity however, it can be almost difficult to discover purchasers and you still have real estate...

Taking care of a Rental Property

Taking care of a Rental Property Those who live in a rental residential or commercial property might have concerns concerning how they must care for their residence. While dealing with the residential or commercial property with regard and not purposefully doing...

RECENT POSTS

1031 Exchange Companies

1031 Exchange Companies The most convenient technique to start a 1031 Exchange deal is to get in...

ABOUT  TWENTY
THREE HOMES

The Twenty Three Homes are one of the premiere real estate groups locally, nationally and internationally, specifically dealing with high-end properties and exclusive clientele. Partner with Keller Williams Twenty Three Homes are full service real estate experts whose clients benefit from the custom tailored, hands on service while receiving all the exclusive amenities and resources of one of the most established and respected firms in the business.

GET IN TOUCH