Tip #1 – Good Credit
Good credit is mandatory when applying for a home. Most lenders require your credit score to be at or above a 640 to qualify for a home loan. A credit score of 740 and higher will get you better ratings.
Tip #2 – Good Down Payment
The higher your down payment is, the lower your interest rate will be. Putting 20% of the home’s purchase price is good but to get the very best rate putting down 30% is better. The average home down payment for a primary conventional loan is 5% and the average home down payment for a primary FHA loan is 3.5%.
Tip #3 – The Right Lender
Getting the best rate depends heavily on your lender of choice. Shop around to different companies and find the lender that truly has your best interest at heart. Ask your Realtor for referrals, who they recommend and who have they had the best experience working with. Based on your credit score and financial situation, your lender can help advise you how much money for down payment on home you’ll need.
Tip #4 – Stable Job History
Lenders are looking to see if you are stable in employment or if you have been out of work for extended amounts of time. Lenders will verify by your last two years of tax documentation, recent pay checks, and recent bank statements.
Tip #5 – Fewer Liabilities
The more debt you have on your credit report can play a very important role on getting you a good interest rate. The amount of monthly payments due will determine the amount of money that is lent as well.
Tip #6 – Loan Type
Talk to your lender about the best possible option for your situation. FHA loans are government backed loans and run a lower interest rate over a conventional loan, however the mortgage insurance on a government backed loan will typically run higher.
Call The Jason Dawson Team at 480.442.9809 for more information on how to get the BEST interest rate and for mortgage lender referrals!