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Posted on July 6, 2009 by Ray Heinson | Posted under Mortgage Refinance
How How To Zero In on Low Mortgage Rates
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Refinancing in today's lending bottleneck is not close to what it used to be just a few years ago, when homeowners with only an inkling of home appreciation and with average credit scores were eligible to be approved for a loan. Borrowers today must have good credit, twenty-percent or more equity and very little external debt. Presently, individuals must have a credit score of 700, and if you are seeking the most attractive rates, a credit score higher than 740 is required. And some lenders or mortgage companies require additional strength such as six-to-twelve months cash reserves in the bank. If your credit score is not high enough to get the best loan rates, consider cleaning up your credit before beginning the loan process. Some ways to raise your credit score are to pay off some revolving debt such as credit cards, pay off auto and student loans and to correct any credit reporting mistakes with the major bureaus. Once you begin doing this the better rates will be offered to you as well. There are two more figures which will have a substantial result in how much you pay for a mortgage loan: the loan-to-value ratio and debt-to-income ratio. These two ratios are the glaring numbers for underwriters, loan agents and for senior loan approval. The ratio called the loan-to-value determines what your house is valued at related to the loan amount. Normally, low rates are offered to those borrowing less than 80% of their home's value. The debt-to-income ratio reflects your financial ability to repay your mortgage and is utilized by comparing your total monthly payments which includes your home, auto, credit cards, college loans, etc. relative to your gross monthly income. In previous years, lenders permitted borrowers debt ratios up to 60%. In the current mortgage environment, lenders want to see homeowners borrowing 42% or lower. Obviously, a low interest rate helps your debt ratios remain low. This is what borrowers must understand. As the market experts and homeowners adjust to the guidelines, more loans will become approved and default ratios will fall off. As a result, this will translate into lending standards perhaps becoming a little bit more lenient. Homeowners and new homebuyers are enjoying some of the lowest mortgage rates offered in over 50 years so with this in play maybe the base has been formed in the real estate market. About The Author: Ray Heinson is an investor in real estate and suggest these resources for Jumbo Home Mortgages and or Find Low Mortgage Rates from trusted lenders in your area. |
Tags: LOWEST MORTGAGE RATE, RATES, HOME LOAN, LOAN APPROVAL
