5 Things That Will Help You Get the Lowest Mortgage Rate
Get your free 3 bureau credit report and score
In order to qualify for the lowest mortgage rate, lenders will want to see a score of around 750 or above. If you're interested in improving your credit score, you will also need to know where you stand. It is definitely a good idea to check your credit report at least once a year to be sure that their are no errors. If your report does have errors of any kind, you will need to get them resolved as soon as possible because they can negatively affect your score. Once you have done this, you'll be on your way to finding a great Florida mortgage.
Work on improving your credit score
If your score is below 750, do not worry! There are ways that you can improve your score before it becomes time to apply for your mortgage. Your FICO score is based on 5 different things: payment history, amounts owed, length of credit history, new credit, and types of credit used. The largest portion of the formula for determining your score is based on your credit history. Any past due payments or accounts in collections can be particularly harmful to your score. If you pay your bills on time all the time, your score will continue to improve.
Pay down debt
Another way to improve your score in order to get the lowest mortgage rate is to reduce the amount of money you owe. These amounts account for 30% of your entire credit score. When you pay off loan debt and reduce balances on your credit card, your score will vastly improve. One thing to remember though is to not close your accounts after you've payed them off. Keeping them open longer will give you a lower debt utilization ratio. In the end, the amount of debt that you have will affect the total amount of money that a bank or company will be willing to lend you.
Save for a down payment
In order to qualify for the lowest interest mortgage rate possible, you will need to have saved a down payment of at least 20% of the home's value. This is because lenders charge different interest rates to individuals based on their perceived risk. Borrowers who have larger down payments will actually qualify for better rates. That is because the more the equity, the lower risk to the lender because they will be more likely to receive full amount owed to them if the borrower was to default on the loan.
Don't take on a mortgage for the maximum amount
For those interested in taking on a Florida mortgage, especially an Orlando mortgage, it is especially necessary to not take on the maximum amount you qualify for. This ensures that you are not house pour. It is important to run the numbers yourself to see what the maximum payment is that you feel comfortable with.
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