Keep The Interest Rates On Your Mortgage Low With 2 Smart Moves
Many people fail to realize that the key to successfully owning a home lies in getting affordable interest rates on their mortgages. Luckily, you can take measures to increase your chances of getting affordable rates.
With the interest rates holding steady at below five percent, now is the time to buy a home, says American Loans, a mortgage company in Salt Lake City. Unknown to many first-time homeowners, low-interest rates on a home loan are the key to building equity in the house.
It means that you get affordable monthly payments that don’t strain your finance and lower the quality of life. However, getting these low rates is not an entitlement, it is a privilege. In that sense, you must earn the right to enjoy these affordable rates.
Eliminate red flags
As with any financial transaction, lenders are keen to minimize losses, and they do this by advancing money to the qualified borrowers. Before approving your application, they will dig into your financial history. If they like what they find, you become eligible for the loan. On the other hand, if they find lots of red flags, they are hesitant to accommodate your request.
Major red flags include carrying too much debt, delinquency on payments, low credit scores, and a low-income level. These factors mark you as a high-risk borrower with a high likelihood to default on your payments. If they don’t deny your loan, you will have to settle for higher than normal interest rates and private mortgage insurance.
Before making a home loan application, you should take a few precautions to increase your chances of success. First, you need to check your credit report which is a detailed account of your financial history. Despite the credit bureau’s attempt to depict an accurate account, errors abound.
In fact, 5 percent of the reports contain errors that deal a deadly blow to the victims’ credit scores. You are entitled to three free credit report each year. Scrutinize them and notify the credit bureau of any anomalies that you spot. Doing so can significantly improve your credit score as well as our credit standing.
Mortgage lenders gravitate towards borrowers with an excellent financial standing, rewarding them with friendly terms. With a little bit of effort, you can get into their good books and enjoy these rates as well.