Mortgage rates refer to the costs of transferring a property interest as a debt security to lenders. Knowing how to get the best mortgage rates is very important to homeowners who want to save huge amount of money that they need to allot for purchasing properties. Below are the factors to consider as well as the simple steps that you can follow if you are interested in getting the best mortgage rates.
Know the Credit Rating
The most significant step that you need to take if you want to get the best mortgage rate is to know your credit rating. To identify your credit rating, it is important to request for your annual credit report at credit reporting agencies. Look for a professional who can order the credit score in the report. This service usually costs $5 to $10. If the score that you get is at least 750, you can easily get a low interest rate.
Determine the Debt-to-Income Ratio
Another effective method that you can use to identify if you qualify for a lower interest rate is by determining the debt-to-income ratio. To do this, you have to add the total net, which include commissions, overtime pays and bonuses. Add the pension, child support, alimony and other investments in the total net. Get the sums of monthly debts including house rental, credit cards and student loans. Divide the total monthly debt by the total monthly income. To get the best mortgage rates, it is important that the result should not exceed .36.
Steps in Gathering Data for Your Mortgage Rate Application
Make a list of the locations of the places where you stayed in the past two years. List the names as well as addresses of employers or work superiors in the last two years. Compile all the pay stubs in the past two months. Gather all the federal income tax returns and W-2s in the last two years. If you are self-employed, make sure that you compile all the profit and loss records in the past two years.
In addition to these, it is also essential to declare all your assets and debts. Make sure that you include all the information about your checking and savings accounts, mutual funds, credit union accounts as well as secured accounts such as investments, life insurance and stocks. When it comes to debts, be sure that you declare lease agreements, mortgages, recreational car loans and credit card outstanding balance.
Additional Reading on Home Mortgages
- Mortgage Interest Rates
- Mortgage Rates
- How Much Mortgage?
- How Much Can I Borrow?
- Best Mortgage Rates
- How Much Can I Afford to Spend?
- Mortgage Lenders
- How Much Can I Afford?
- Reverse Mortgages
- Mortgage Interest Rates
- Should I Refinance?
- Mortgage Rate Guide