Low Mortgage Rates
Low mortgage rates starts here now.
For most people, applying for a low mortgage rates loan to buy
a house is one of the biggest and the toughest lifetime financial
exercise. It gets even more difficult for those who have had a bad
credit history. Even though people with bad credit are at a
disadvantage, lenders do recognize their financial problems and needs
and offer them mortgage deals that might not be the best but which at
least provide them with an opportunity to own a home.
In order to get a low mortgage rates and its options, a borrower has to
impress upon a lender that in spite of a bad past, he is financially
responsible. To convince the lender of your credibility, the foremost
thing to do before applying for a mortgage loan is to start clearing the
red flags that mark your credit report. Begin by reducing your credit
card debts as much as possible. Similarly pay off other debts like car
loans or auto debts, particularly if they have more than 9 monthly
installments left, since auto debts with less than 9 payments are
generally excluded from debt calculations.
The next best thing to do is start saving big for a good size down
payment on your home. Since you fall in the bad risk category for a
lender, the bigger the down payment, the more it assures the lender of
being able to recover his cash in the event of a future default. Do
remember to include closing costs when saving for your down payment as
they can add as much as 3% to the purchase price. Overall, saving more
than 20% of the total purchase price should improve your credibility.
The borrower should target and reduce his monthly liabilities to less
than 50% of his total income in order to give confidence to the lender
about his ability to repay his mortgage loan without any defaults. It is
never to late to get into better financial habits, like reducing the use
of credit cards and postponing large purchases. At this point of time,
it is wise to hold on to your present job and not make any unnecessary
jumps. A steady employment of over two years adds to your image as a
consistent and stable person.
Lenders will go through your bank statements to figure out your
expenses and incomes. Any unusual entry may raise question marks. If a
friend or family member gifts you money to help you purchase your house,
make sure the lender know it is a gift and not another loan. Reveal all
your liquid and cash reserves that you own since lenders judge your
paying capacity from them and generally prefer that they have at least
two month's reserve of the monthly low mortgage rates payments.
Last but not the least, even factors like prompt payment of house
rents, phone bills, insurance premiums and other financial bills add to
your credit worthiness. Finally, even after you have spruced up your
credit image, make sure to approach more than one lender and compare
their lending terms and conditions in order to get the low mortgage
rates
loan.
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