Tips to Finding the Best Mortgage Interest Rates for Your Credit Score
While we all love to save money, those of us who have run into some bad luck when it came to paying our bills may find it hard to get the best possible mortgage interest rates when it comes time to purchase or refinance a home loan. Whether you were late on a few payments, or you went over your credit limit on any number of cards in your wallet only once, these mistakes can cause your credit rating to drop causing you to have to pay more fees and higher mortgage interest rates than someone who may have perfect credit. A common case with most mortgages, 85% of mortgages to be exact, is they are packed full of high fees as well as even higher interest rates that the banks assume you will be too afraid or naive about to argue. Here are some simple tips that can help you get the lowest mortgage rate so you can save money on a new or existing mortgage quote regardless of the amount of money you are looking to borrow from your mortgage lender.
First, before you even start shopping around, take a look at your credit reports. Since every mortgage lender will base their mortgage quote as well as the mortgage interest rates they offer you on the three digit number that is associated with your credit report, you will want to make sure all the information that exists on it is 100% accurate. If your report shows accounts you no longer have, or active accounts that you never opened, make sure to contact the three major credit reporting companies immediately. Any negative information that shows up on your account can cause you to have to pay a higher interest rate when you apply for a mortgage loan or even mortgage refinancing. When requesting to have errors on your report fixed, you will want to note the errors on a copy of your report and include that with a written letter to the credit bureaus explaining what the problem is and that they please investigate it. You will want to also include any proof that you have disputing the entry on your credit report and you will want to send it all via certified mail. If you avoid this crucial step, you increase the chance that you will miss vital problems that can potentially cost you hundreds if not even thousands in extra fees each year.
Second, you will want to make sure you pay all your bills on time every month and use your existing credit with caution. One of the biggest parts of your credit score is whether or not you pay your bills on time. Your potential mortgage lender will want to see that you have paid your bills on time every month for at least the last six months. Regardless of the amount of money you requesting to borrow from your home loan lender, banks want to feel comfortable with the fact that you will actually make payments to them. If your credit report shows a lot of skipped payments, or late payments, you run the risk of being offered a higher interest rate loan, and that is based on whether or not the mortgage lender considers you a safe credit risk to begin with. You will also want to be conscious of the existing balances you have on any existing lines of credit, i.e. credit cards, you may have. If you have multiple cards with balances that are utilizing more than half of the existing credit limit, you will want to try your best to pay down those balances as much as possible before you apply for a mortgage loan. When your debt to credit ratio exceeds 50%, this can also have a negative effect on the rate you receive because it shows that you are not as savvy at managing your available credit, which can also send up red flags to potential lenders looking to lend you money.
Lastly, take the time to compare the rates and fees listed on a mortgage quote. The mortgage quotes you get from most lenders are full of fees and other mortgage information jargon that is meant to confuse the borrower more than provide them with useful information that can help them make an informed decision. If for any reason you feel that the fees that one bank is trying to charge you is much higher than those at another bank, feel free to shop around. When banks know that they have competition when it comes to offering someone a mortgage loan on a new purchase or even a mortgage refinance, there is a better chance that they will deliver a mortgage quote that has lower fees and a better interest rate than those of its competitors. Most importantly when it comes to choosing the best mortgage lender, you will want to make sure they use the rates that are on par. This means that the rates that are assigned to a potential mortgage loan are based on the customer's credit score, and not "other" underlying factors that should not have any relevance when it comes to providing a mortgage quote. If you are still not happy with the numbers you are provided with, it's ok to walk away. Odds are there is at least one other mortgage lender that is more than likely to want to work with you in order to get you into the home of your dreams at a price you can realistically afford.
These are just a few of the tips that can help you find the best mortgage interest rates possible based on your credit score. Make sure to always keep tabs on your credit report and report errors to the three credit bureaus as soon as you find them, and remember to shop around when it comes to choosing the best mortgage lender for your needs, and you are sure to find the best interest rate possible, regardless of what your credit score may be.