A mortgage rate refers to the rate of interest to borrow money from a lender. A mortgage lender determines the mortgage rate and it can vary based on the credit profile of the homebuyer. But irrespective of their credit profile, every homebuyer wants to ensure the best mortgage rate as it will help them to save a lot over the life of the loan. You would also want the same.
Though it is difficult to get the best mortgage rates Houston, it is not impossible. A few simple but calculative and effective steps can help you with this. But if you commit mistakes then you should stop dreaming of getting the best mortgage rate. Here is a list of mistakes that you should avoid when looking for the best mortgage rate for your home loan.
- Making another major purchase
When you are planning to buy a dream home is not the ideal time to open a zero-interest credit card account or to purchase a new car on credit. While deals on mew credit cards may seem enticing to avoid, the new inquiry can be a red flag to mortgage lenders and can also prevent you from getting the best mortgage rate over the life of the loan. If you suddenly find yourself without a car, see whether you can replace it without taking out a car loan. Like a new credit card, it will add a new inquiry to your credit reports and will affect your debt-to-income ratio in a negative way. So, it is better to avoid making any big purchase when you are looking for the best rate for your home loan.
- Not having a steady source of income
In case you get a new job opportunity, you may keep wondering whether to go or it or stay where you are now. Well, it is better not to move, if you want to get approval for your loan program with the best rate possible. Many often made the mistake, but you should not. Mortgage lenders will like to see at least two years at a job to show that you are stable enough to qualify for a mortgage. While a new job can offer you a higher salary package, an easier commute, and other benefits, changing too soon before buying a home can prevent you to get the best deal on your mortgage.
- Not knowing what to look for
The mortgage lender who is recommended by your friend or neighbor, may not be the only one you look at. Besides, you should not opt for a lender based on how close their offices is to your home and whether you do business with them for other banking products. It is an area where being brand-loyal can hurt your wallet. Along with considering the lenders who are already familiar and recommended, you should also check the rates at ones who are new to you.
- Incorporating too much new credit card debt
When someone is saving for a down payment, as well as closing costs, he or she may be tempted to charge things that they would otherwise pay cash for. But it is a mistake that could lead to a higher interest rate, or even prevent them from getting approval for the home loan program. Generally, credit utilization makes up around 30% of one’s FICO credit score. Utilization is defined as the amount id debt that one has. The ideal option is to watch spending during the months before buying a home. When you keep your spending low, credit card utilization can also be kept low.
Keep these points in mind and avoid making any mistakes when applying for a home loan program. You will definitely get the best mortgage rate for your home loan program.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.