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Mortgage Rates – Some New Challenges

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Mortgage Rates How to Secure the Best Terms

Evaluate your Credit

To take advantage of current mortgage rates, you should first evaluate the status of your credit rating and credit score. This is true any time you want to make a major purchase, but it is especially important during the current period. While economic conditions are improving in general, lenders in countries like the United States, Canada, and the United Kingdom are still scrutinizing credit histories closely before granting new mortgages.

By taking the time to review your credit history and current score, you have the chance to correct any information that is out of date or simply incorrect. Doing so will provide a better picture of your actual circumstances, and increase the odds of commanding the best terms for any type of mortgage. Make sure you begin this process well before you submit any mortgage applications to any potential lender, and don’t forget to check your credit report to confirm the changes and corrections have been made.

It is also important to remember that different lenders will utilize different combinations of the reports prepared by each of the three main credit-reporting agencies. This is significant, because the data found on one report is not necessarily found on the other two reports, and vice versa. In order to maximize your chances for the best rate, you need to review and correct all three of your reports. All it takes is one incorrect item on one report to cause your lender to think twice about granting a lower rate of interest for your mortgage, or even doing business with you at all.

This video provides a helpful mortgage rate overview:

How do Mortgage Rates Work?

Research Mortgage Options

With your credit report as accurate as possible, take the time to familiarize yourself with the different types of mortgages on the market today. Depending on your circumstances, a fixed rate mortgage may be your best bet. At the same time, one of the several different adjustable rate mortgages (also known as variable rate mortgages) may be a better option.

Keep in mind that duration will also have some impact on the rates you can expect to receive. Ideally, you want to shoot for mortgages with the lowest rate of interest you can receive, the lowest monthly payment possible, and the most convenient terms and conditions overall.

Evaluate your Debt

While many people don’t think of this factor, you would do well to take a long look at your current income to debt ratio. While you may earn a decent annual salary, your current amount of credit card debt or other obligations such as a car loan or personal loans may cause lenders to wonder if you will be able to maintain the payments on a mortgage. This is especially true today, when many lenders are less willing to assume risks in order to write new mortgages.

Before you approach any lender, take a look at your current level of indebtedness. If you have a substantial amount of credit card debt, try to eliminate some of that debt before you submit any mortgage applications. Not only do you ease the burden on your monthly budget by freeing up a larger portion of your income, you also will have more notations on your credit report that confirm you pay more than the monthly amount due consistently. These small but significant bits of information will help increase your chances of being offered the most competitive rates. Consider your Savings

There is also the matter of savings. In some countries, it is necessary to place a certain percentage of the amount borrowed into a savings account with the mortgage holder. Even in countries where this is not a requirement, having a savings account that is active and in good standing always looks good to lenders. Start one at least six months before you apply for your first mortgage and make sure to deposit something each month. Having that small but growing nest egg in place is one more sign that you are worth the risk.

Once you have all the pieces in place, don’t be swept off your feet by the first attractive mortgage offer that comes your way. The name of the game today is to compare every conceivable offer that is within your ability to command. Even if you think your credit is shaky, don’t automatically assume you can’t get a decent rate and attractive terms.

Don’t hesitate to mention to a particular lender that a competitor has offered you a lower rate of interest as well as comparable terms.

This could open the door for a counter-offer that places a deal on the table that could save you hundreds or even thousands of dollars each year that the mortgage is in place.

By putting your financial affairs in order, researching your options, and comparing rates with different providers, there is an excellent chance you will find and obtain the best mortgage rates currently available for your area.

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  • Posted On June 8, 2012
  • Published articles 10

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