for a mortgage can be quite an overwhelming experience.
Especially if you are a first time home buyer and have
little to no knowledge about the loan process. If you
have shopped online you have already found hundreds
of mortgage sites quoting low ball rates for every loan
term under the sun. One would think that if you just
spend a few hours online you will find the lowest rate
available and receive the best deal. This is not rarely
the case. Don't play the interest rate game without
a load of information, Read this first!
Not all low rates are considered
There is a lot more to the cost of a loan than the interest
rate. Many lenders will set the interest rate as low
as possible and then hike up the number of points and/or
fees attached to the loan once you have applied. Most
online mortgage lenders will post the number of points
next to the interest rate for your consideration. One
point is equal to one percent of the total loan amount.
To ensure the best deal, compare the Annual Percentage
Rate (APR) of the loan which includes the interest rate,
points/fees and closing costs. If you compare companies
using this percentage you will find that a lot of the
low rate lenders are not the best deal in town.
To compare quotes accurately,
ask for the APR instead of the interest rate.
What?!! I don't qualify for
The most important thing to learn about mortgages is
that rates are based on your individual needs and financial
situation. The rates quoted over the phone and/or online
are not always accurate representations of what you
will qualify to receive. Most rates quoted are applicable
only for individuals with perfect credit, a low debt
to income ratio and either a large down payment or a
lot of equity in their house. These qualifying factors
are crucial elements to be aware of before shopping
for a loan.
Your credit history is important to lenders when evaluating
your loan. An individual with many late payments will
not be deemed as trustworthy for payment terms as someone
with perfect credit. Find out what has been documented
on your credit report and correct any possible mistakes.
2. DEBT TO INCOME
Lenders use your debt to income to verify that you have
the means to pay a monthly mortgage. To figure out how
much debt you have compared to your income use the following
formula. This number is usually expressed as a ratio.
Add up the following Monthly Debts: Mortgage + Auto
loans + Student Loans + Credit Cards + Furniture loans
Debt to Income % = Monthly Debts
3. DOWN PAYMENT
There are several loans availabe with little to no down
payment, however, most of these loans come with a higher
interest rate. Evaluate your finances and estimate the
maximum amount of money you can afford to put down on
your new home. Once you have made this estimate, find
out how much house you can afford by using the USBankRate.com
If you are looking to refinance, receive a home equity,
consolidate debts or make home improvements then you
need to know how much equity you have in your house
before you apply. Most of the time, the more equity
you have the more money you can borrow. To estimate
this calculation use the formula listed below:
Equity Ratio = 100% - Loan Amount
Equity $ Amount = Current Value - Loan Balance
5. REMEMEBER WHEN
REQUESTING A QUOTE FROM A LENDER YOU NEED TO BE AWARE
OF THE FOLLOWING:
a) Locks >45 days usually have a
b) If you are waiving escrows, there
may be a charge to the rate and / or the points associated
with the product you are looking for a quote on.
c) If you are taking cash-out and borrowing
>70% of the value of the house, then the rate / points
may be higher than quoted on the site.
d) Rates are like the stock market
-- they can change every minute of every day based on
market conditions. Rates quoted on sites are time-stamped
as of the time posted, and are subject to change based
on CURRENT market conditions.
e) Remember: it is your responsibility
as the consumer to obtain your updated title insurance,
homeowners insurance in order to close within your lock
The USBankRate.com service connects you with multiple
investors in your area that quote rates based on your
specific needs and financial situation. These investors
have competitive rates, can handle less than perfect
credit and low down payments, and are ready to quote
your mortgage within the next 48 hours. Request your
FREE USBankRate.com EVALUATION today!