Whenever a home owner refinances their mortgage they always want the best mortgage rates they can possibly qualify for. Although low mortgage rates are advertised all over the place qualifying for them is a little more involved then simply just applying and getting the loan. So if you are wondering what credit score is needed for low mortgage rates read on and discover how your interest rate is determined.
The main misconception is that mortgages are only based on credit score. This is partly true and recently many lenders are requiring credit scores of 680 or higher to get the best rates. Even many wholesale FHA lenders now want a 580 credit score for borrowers. But even if you have good credit you will still need to meet some basic criteria to get the lowest mortgage rates possible.
When you apply for a mortgage your mortgage broker or loan officer will collect data from you such as recent pay stubs, bank and financial account statements and last 2 years tax returns. They will also order a property appraisal for your home to determine a market value. With this information your loan scenario can be run through an automated underwriting system. This system will look at many variables and issue a loan approval or denial based on these variables. So what exactly does the automated system look for?
Debt To Income Ratios: This is a mathematical calculation and is your total debt divided by your gross income. To qualify for low mortgage rates your DTI should be at or below 41%. Only accounts that are revolving count towards your debt to income ratio so do not count phone bills or other utility bills.
Loan To Value: In order to get the best rates your loan to value should be at 80% or less of the appraised value. As an example if your home was worth $100,000 then you should borrow no more then $80,000. As your loan to value increases so will your interest rate.
Amount of Reserves: Your reserves are basically cash you can access in an emergency. So figure in accounts like IRA'S, 401K's checking savings and any other account you can liquidate quickly. As long as you have enough in reserve to cover 3-6 months expenses you should be fine
Mortgage Payment History: Having timely mortgage payments with no 30 day late payments is critical to getting approved for low interest rates. Even with one 30 day late you will not be approved.
Although there are more variable these are the ones that carry the most weight when the automated system is determining your eligibility for conforming loan approval.
If you would like more information on obtaining the Lowest Refinancing Rates then head over to http://www.mkemortgage.net where you can browse over 2000 mortgage articles written by a Wisconsin Mortgage broker with the intent to educate consumers about the loan process.
Related : bosch miter saws the best table saw blade money-online
ไม่มีความคิดเห็น:
แสดงความคิดเห็น