Getting the Lowest Mortgage Rates
All home buyers want the lowest mortgage rates when applying for a home loan, because it directly translates to a smaller mortgage payment each month.
And who doesn't want to shrink the size of their monthly payments?
But how does one obtain the lowest rates on a mortgage loan and, for that matter, why is it important in the first place? These are the subjects we will discuss in this tutorial for first-time home buyers.
First off, let's clear up some terminology here. When we talk about getting the lowest mortgage rates in this context, we are referring to the interest rate a lender offers you as part of your mortgage loan. Interest is a primary component of a home loan. It's the "I' in the acronym PITI (which stands for principal, interest, taxes and insurance).
By the way, you can learn more about this kind of terminology from our mortgage glossary on the main website.
In other words, the interest rate is one of the factors that will determine the size of your monthly mortgage payment. Now you can see why it's important to seek out the lowest interest mortgage rates when applying for a loan.
When you apply for a home loan, you be sure that the mortgage lender will request your credit reports and scores from all three of the credit-reporting companies (Experian, Equifax and TransUnion). Your credit score is one of the major factors that will determine the kind of interest rate they offer you.
Lenders reserve the best / lowest mortgage rates for borrowers who fall into a certain credit category. What score you need to qualify for this category will vary from one lender to another, but it's safe to say that the better (higher) your credit score, the lower the mortgage rate you'll receive.
Here's something not many home buyers realize. Over the last few years, the score needed to qualify for the best rates on a loan has risen. This is largely due to tougher restrictions on mortgage lenders (as a result of subprime mortgage crisis of 2007 - 2008). Today, buyers need a higher credit score to qualify for the lowest rates on a home mortgage loan.
And who doesn't want to shrink the size of their monthly payments?
But how does one obtain the lowest rates on a mortgage loan and, for that matter, why is it important in the first place? These are the subjects we will discuss in this tutorial for first-time home buyers.
Why Low Rates Are Important
First off, let's clear up some terminology here. When we talk about getting the lowest mortgage rates in this context, we are referring to the interest rate a lender offers you as part of your mortgage loan. Interest is a primary component of a home loan. It's the "I' in the acronym PITI (which stands for principal, interest, taxes and insurance).
By the way, you can learn more about this kind of terminology from our mortgage glossary on the main website.
In other words, the interest rate is one of the factors that will determine the size of your monthly mortgage payment. Now you can see why it's important to seek out the lowest interest mortgage rates when applying for a loan.
How Your Credit Score Relates
When you apply for a home loan, you be sure that the mortgage lender will request your credit reports and scores from all three of the credit-reporting companies (Experian, Equifax and TransUnion). Your credit score is one of the major factors that will determine the kind of interest rate they offer you.
Lenders reserve the best / lowest mortgage rates for borrowers who fall into a certain credit category. What score you need to qualify for this category will vary from one lender to another, but it's safe to say that the better (higher) your credit score, the lower the mortgage rate you'll receive.
Here's something not many home buyers realize. Over the last few years, the score needed to qualify for the best rates on a loan has risen. This is largely due to tougher restrictions on mortgage lenders (as a result of subprime mortgage crisis of 2007 - 2008). Today, buyers need a higher credit score to qualify for the lowest rates on a home mortgage loan.
Labels: Home loans
posted by Brandon at
1:34 PM
