FIT Blog

Mortgage rates have a huge influence on how much you pay for a home each month, as well as the overall amount you will end up paying. Obtaining a good mortgage rate could eventually save you a substantial amount of money. So, how do you go about getting a good mortgage rate? Below we give you some tips:

1. Maintain a Stable Income

Mortgage lenders will look at your monthly income when determining the mortgage rate they will offer you. They do this as a way to ensure you will be able to pay the required amount each month. If you can prove that you have had a stable income for around two consecutive years, they will most likely give you a better mortgage rate. Any promotions or bonuses you receive during this time will only be advantageous for you.

2. Focus on the Ratios

If you are spending too much of your income each month repaying debts, it will not be a good look. Mortgage lenders typically only like to see a maximum of 36% of your monthly income being used to repay debts. They also would prefer only up to 28% of your monthly income going towards the mortgage payment. This proves to them that you are flexible about these payments and are not going to be spending most of your money paying back debts.

3. The Larger the Down Payment, the Better

To make mortgage lenders more comfortable with giving you a lower interest rate, try providing a larger down payment upfront. They will see the loan as being less of a risk because you will have contributed a large portion of money toward the mortgage.

4. Hold onto High Cash Reserves

Some mortgage lenders will require cash reserves, which is fluid cash that you have saved up in your bank account. Most will want you to have enough saved up that you can pay off two monthly payments after the closing of your mortgage. With higher cash reserves, the lender will again see the loan as being less risky.

5. Watch Out for That Credit Score…

As you may already know, credit scores will play a huge factor in your ability to get a mortgage and a low mortgage rate. If you have a credit score of above 760, you will be in great shape, as lenders will usually give rates of around 3.5% for that. The better your credit score, the better your mortgage rate.

Closing Thoughts

In addition to following these guidelines, make sure you also consider a variety of mortgage lenders. Some lenders will have different requirements, making one better for you and your financial situation than another. For even more tips, consider FIT Agency. We provide comprehensive real property title and settlement services to realtors, lenders, attorneys, developers, government entities, and homebuyers and sellers. We are proud to provide personalized service by getting to know each client and working with them individually to achieve their goals. To learn more, contact us today.