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

Courts of Tysons

Historical Context The history of Tysons dates back to the early 1700s when the area was primarily farmland, home to Native American tribes such as the Algonquin and Iroquois. English settlers established agricultural communities, and the land was later utilized as a...

Courts of Laurel Crest

History of Courts of Laurel Crest The Courts of Laurel Crest is situated within the broader community of Laurel Hill in Lorton, Virginia, part of Fairfax County. Fairfax County itself has a rich history dating back to its establishment in 1742, initially carved from...

Courts of Fox Mill Homeowners Association

Historical Overview Origins and Development: The Fox Mill area, including the Courts of Fox Mill, began as a rural farmland before the mid-20th century. The transformation into a residential area was part of the post-World War II suburban boom. The specific...

Courts Cluster

Historical Context Fairfax County, named after Thomas Fairfax, 6th Lord Fairfax of Cameron, has a rich history that dates back to its establishment in 1742. The Courts Cluster, located centrally within the county, is named for its proximity to the Fairfax County...

Courts at Riverwind

History of The Courts at Riverwind The Courts at Riverwind is a residential community managed by Flannery Property Management, located in Centreville, Fairfax County, Virginia. While specific historical details about its establishment are not directly available from...

Courtland Park

Historical Background Early Settlement and Development: Fairfax County itself was established in 1742, but the specific area of Courtland Park developed much later. Originally, the land that Courtland Park occupies was part of the vast tracts owned by colonial...

Courtland at Rolling Oaks Homeowners Association

History of Courtland at Rolling Oaks HOA Fairfax County has a storied history dating back to its establishment in 1742, named after Thomas Fairfax, 6th Lord Fairfax of Cameron. The creation of communities like Courtland at Rolling Oaks is a more modern development,...

Courthouse Woods HOA

Historical Background The inception of Courthouse Woods HOA can be traced back to the broader development patterns in Fairfax County during the late 20th century, a period marked by suburban expansion around the nation's capital. Fairfax County has a rich history,...

Courthouse Station Homeowners Association

History of Courthouse Station HOA Fairfax County, established in 1742, has a rich history of community development, with neighborhoods like Courthouse Station emerging as part of its suburban growth. Courthouse Station likely developed during a period when Fairfax...

Courthouse Oaks Homeowners Association

History of Courthouse Oaks HOA: Courthouse Oaks HOA is nestled within Fairfax County, Virginia, an area with a rich history that dates back to its establishment in 1742. The community of Courthouse Oaks, however, represents a more recent chapter in Fairfax County's...

RECENT POSTS

Courts of Tysons

Historical Context The history of Tysons dates back to the early 1700s when the area was primarily...

Courts of Laurel Crest

History of Courts of Laurel Crest The Courts of Laurel Crest is situated within the broader...

Courts Cluster

Historical Context Fairfax County, named after Thomas Fairfax, 6th Lord Fairfax of Cameron, has a...

Courts at Riverwind

History of The Courts at Riverwind The Courts at Riverwind is a residential community managed by...

Courtland Park

Historical Background Early Settlement and Development: Fairfax County itself was established in...

Courthouse Woods HOA

Historical Background The inception of Courthouse Woods HOA can be traced back to the broader...

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