Getting the mortgage rate of your wish is not an easy task. Only a month-long comparison is not going to give you the cherished result. There are several things that you need to take care of. For instance, your credit score is one of them. Why the credit scores? The mortgage industry utilizes the credit score as a crucial factor. It indicates whether a buyer is eligible for the home loan program or not. In this way, the FICO score leaves an impact on the interest rate that you are going to pay.
So, getting your hands on the best mortgage rates Houston is an interesting challenge. There is, of course, a pile of factors and aspects at stake. First of all, the mortgage rate varies by points based on a few compensations. This difference can cost you thousands of dollars for the interest payment over the loan term. You still can be hopeful about unlocking the lowest possible rates once your profile is well-qualified. Go through the factors which the private lenders consider for evaluating the loan rates.
Whether you are focusing on a stable income
This might seem surprising to you, but every lender prefers a borrower with steady employment. It is actually great if you have been employed for the past two years. A long history of unemployment is a red flag before the lenders. Basically, a pattern of reducing earning is not a good sign. The lenders tend to offer low mortgage rates to those who have had the same job for at least 2 years. If you have changed your job and taken another position with higher pay, the lenders do not frown upon. However, private lenders are usually strict with self-employed professionals. Make sure you have tax returns for the past two years.
How much you are going to put down
It is a general rule that a 20% down payment is what you should choose. This helps in reducing mortgage rates as well. Loan rates depend on various risk factors. For example, a loan with 20% down is not considered as risky as 5%. Of course, it is not the sole reason to save up for 20% of the loan value. In this way, you can dodge the private mortgage insurance. When you are aiming for a conventional loan with a 5% down payment, 0.62% is added to the mortgage payment. Of course, your credit score range must be between 720 and 759.
Where your credit score is at
Mortgage lending is now based on tiered-pricing. What does it mean? This indicates that the loan rates are altered depending on different criteria. One of the key factors is the FICO score. The credit score helps in fixing whether you are going to qualify for the loan. The best mortgage rates are only reserved for those who have more than 760 scores. With the decline of credit scores, the interest rate also goes up. No matter which loan you are targeting, always go through the credit score requirements.
As you can imagine, applying for a home loan is not a cakewalk. It can get easier when you have your lender’s support. So, practice good credit habits and unlock the best mortgage rates in Houston.