How Low Can You Go?
The interest rate you pay on your mortgage depends on a number of factors including:
Current market conditions
Your credit score
Your down payment amount
Your type of mortgage
The bottom line is that the better your financial shape, the better chance you will have of securing the lowest rate in a refinance. To understand your “fiscal fitness,” start by looking at yourself as a lender would and consider your:
Credit score: Don’t just look at your score, but the history that goes into calculating it – things like late payments, the length of your credit history and credit inquiries. Where possible, address and correct any issues to help improve your score.
Loan-to-Value Ratio (LTV): : The LTV is the difference between your requested loan amount and your home’s appraised value. A higher LTV often means a higher interest rate.
Debt-to-Income Ratio: This ratio is a measurement of your overall debt – credit cards, auto loans, etc. – against how much you earn. As with LTV, you want this number to be as low as possible, as a lender will consider it when determining if you can get the best interest rate and, most importantly, a mortgage.
Know Your Options
There are many different ways to reduce your interest rate, including choices of loan types and terms. Contact our loan consultant at (800) 451-1895 to find out which options you may qualify for and how to make them work best for you.
