Oct 16, 2017

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3 Pre-Buying Steps To Get The Best Interest Rates Mortgage

3 Pre-Buying Steps To Get The Best Interest Rates Mortgage

Many people spend months going to open houses, scouring the internet for new home listings and contacting their realtor daily to find the perfect home. Unfortunately, these same people don’t take the time before they start looking at loans or go through the pre-qualification process to work on their own financial situation.

When potential home buyers fail to address any financial issues that may occur, they may not qualify for one of the best interest rates mortgage packages. If they are considering a 15- to 30-year fixed mortgage or a jumbo mortgage loan, even a small increase in the interest rate can amount to thousands of dollars of extra loan costs.

To get in a position to obtain the best interest rates mortgage options, home buyers should start working on their finances at least six months in advance.

Improve Your Credit Score

There are some simple, quick things that can be done to improve a credit score. Review all documentation from the three credit bureaus and dispute any errors. Pay off any debts possible or make more than minimum payments. Most buyers will need a credit score of 620 for a conventional, conforming loan while those buyers with a 760 or above will be offered the lowest interest rates.

Get Your Documents in Order

It can be a challenge to get the best interest rates mortgage products if you are self-employed. If this applies to you or a spouse or partner that will be involved in the mortgage application, get all documentation together in advance. This typically includes providing the last two years of income tax returns as well as an official transcript of the filings from the IRS, which requires the individual to submit Form 4506.

Down Payment Increase

In most cases, provided the buyer has a qualifying credit score and all necessary income documentation, the lowest interest rates will be found with the highest down payment amounts.

Saving for a down payment can be a challenge, but it certainly offers dividends in the long term. Additionally, with a higher down payment, a 15-year fixed loan may be a better option, which will also offer lower rates than longer-term mortgages.

To discuss options to get the best interest rates mortgage products given your financial situation, talk to the experts at Guaranteed Rate.

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