The Top Secret to Low Mortgage Rates
When it’s time in life to start shopping for a house, there are few things more scary than baring your financial soul during the mortgage process. It can be intimidating for a variety of reasons, including:
- You have to disclose several months’ worth of detailed financial statements
- You have to account for every single piece of income that you’ve received during that period, including any money given by anyone to you in your account for just about any reason
- Mortgage payments are a huge commitment
- Finding the lowest rate can be confusing
The reality for most mortgage-seekers is that their credit history is the most important factor that affects their mortgage rates, which in turn impacts their ability to affordably purchase a home.
Mortgage lenders generally look at the “3 C’s” when determining mortgage availability:
Credit—Creditworthiness is associated with your FICO score. You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Your credit alerts us how likely it is that you will repay the loan. It tells if your payments are on time, up-to-date and much more.
Capacity—Lenders rely on your debt-to-income ratio to determine your “capacity” to borrow funds. Your debt-to-income ratio is the percentage of your income spent paying debts. It tells them if you are you able to repay the new loan, what level of outstanding personal debt you have and if you have enough earning power and net worth to repay a mortgage or home equity line of credit.
Collateral—Loan officers also take into consideration if you own something of value that can be promised to the lender if you don’t repay the loan. The relationship between the amounts of money the lender lends to the appraised value of your home is called the loan-to-value ratio. The type of collateral used to secure the loan will affect the lender’s acceptable loan-to-value ratio.
It’s critically important for mortgage-seekers to work on their credit history. UpgradeUSA is here to help. We offer technology products such as laptops on payment plans that provide customers with lines of credit, and we report to all three bureaus as installment credit. We report every payment, every month.
Over time, our program helps customers build a credit history they can proudly take to a mortgage lender – and hopefully afford the home of their dreams.
See for yourself – Apply Today!
This month, we are offering our blog readers a free credit consultation with The Credit Pros. Call 888-579-5177 now to take advantage of this free offer!