No doubt you're aware that mortgage rates have been low
throughout the year. You've also probably heard that this fall has
seen interest rates dip to record lows for the modern era. But you
may have also heard that some buyers or refinancing homeowners
are having difficulty obtaining loans at the lowest advertised rates.
The loan application process is much more rigorous than in years
past and the processing time for loan applications has grown.
How can you know whether or not you realistically qualify for the
great rates being advertised? Remember that lenders are all about
assessing risk - they are looking for applicants with a very low risk
of defaulting on their loan. There are five key factors that a
mortgage broker will look at when determining the rate you will
pay on the loan:
Mortgages can still be obtained with low money down, but having
a 20 percent down payment is the best bet if you hope to obtain
the best interest rates. If you can afford to make a down payment
in excess of 20 percent on the house, you will be in an even better
position to take advantage of the lowest mortgage rates.
Lenders these days are going to be very exacting when reviewing
your financial records. They will want to verify that you have the
necessary cash to cover the down payment and closing costs.
Banks will also want to make sure you have some amount of cash
buffer as an insurance policy of sorts. All of this will need to be
proven with extensive documentation, and many lenders will want
to review several months' worth of your account statements.
Lenders will also ask for copies of recent tax returns.
It's no secret that the strength of your credit score greatly affects
the type of loan you will qualify for. The magic number to aim for is
a FICO score of 700 or better. Clearing the 700 benchmark will
qualify you for the best mortgage rates, while a score even just a
few points below 700 can cost you as much of a quarter of a point
in interest, which equates to thousands of dollars over the life of
Not surprisingly, lenders will want to make sure that your career
situation is stable enough that you will be able to continue to
make the loan payments on into the future. Banks will want to see
documentation to indicate how long you have been with your
current employer. Ideally, you will have two years or more
employed by the same company.
Loan Type & Loan Length
Adjustable mortgages have lower initial rates overall than fixed-
rate loans. FHA loans will typically have a higher interest rate, as
will jumbo loans (mortgages taken out on higher-priced homes). As
a rule of thumb, fixed rate loans will have higher interest rates as
the length of the loan increases, so a 10 year fixed rate loan will
have a lower rate than a 15 year mortgage, which will in turn be
lower than a 30-year fixed loan. And all mortgage rates vary from
state to state and even from city to city, so the rates you see
advertised nationally may not be relevant to your search for the
|Kansas Real Estate LLC - Hannes Poetter - President
|Eastern Kansas Real Estate Source.
Serving Miami County, Linn County, Anderson County, Franklin County, and Johnson County.
Covering Residential, Commercial, and Farm Properties.
Hannes Poetter a Crown Realty Real Estate Agent.
|text or call
(913) 731 6600