Loan rates depend on many factors outside of market rates. Your
credit score, the property's value, and company policies all
affect what you will pay for your mortgage. With so many
variables, you can get a better loan rate with some careful
research.
Revaluate Your Credit Profile
There are many factors that influence your credit score besides
payment history. Income, assets, and debt to income ratio are
important to lenders. So even with a recent foreclosure, a high
level of cash assets could qualify you for a decent rate.
Lending companies don't automatically use the FICO score to rank
your loan application. The financing company may use there own
standards or allow loan officers to make decisions. This is
where a letter in your credit report explaining extenuating
circumstances, such as a job loss or illness, can help. Just be
prepared to verify the information if the lender asks.
Take A Close Look At Your Property
Your property's value can also affect your rates. A property in
an area with a proven history of increasing home values is
easier to qualify for low rates.
Conventional loans, those sponsored by government entities such
as Fannie Mae, have lower rates with their loan caps. Larger
loans, also known as jumbo loans, will have higher rates.
Improve Your Down Payment
A large down payment can also improve your rates. 20% is a good
starting figure, but more is better. Right after a bankruptcy,
you may have to put up as much as 50% to secure a loan.
Select Adjustable Rates
Adjustable rate mortgages also offer low rates, at least
initially. Usually you will have one to seven years with a low
fixed rate. This low payment will help you to qualify to borrow
more.
However, after your initial period, mortgage rates will rise and
fall based on a specified market index. Caps will offer you some
protection from drastic increases in payments. You may also have
the option to refinance to lock in low rates.
Take the time to read about rates and terms. Ask for lots of
quotes and play with changes in terms to improve your rates.
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