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8 Little-Known Hacks You Can Use To A Good Mortgage


Getting a great mortgage rate goes far beyond shopping and comparing. It’s about what your credit score is and what’s on your credit as well. In fact, mortgage companies look at a few different factors when it comes to choosing whether or not you get one, and if you qualify, the type of interest rate you’ll get.

There’s a lot on the line when it comes to getting a mortgage. They vary by percentages and there are a number of factors that can affect this number. The difference means you could have a much higher or much lower price and can save you a lot of money over the life of the loan. If you’re looking to get the best rate possible, here are some tips to help improve your chances of getting approved.

Credit Score

Rates are adjusted based on several different criteria, and credit scores are one of these factors. Your FICO credit score is used to determine whether you qualify or not for a loan. It also can determine the rate you’ll pay. The higher your credit score is the better the loan and interest rate will be that you’ll end up with. Begin monitoring your credit score and paying down loans, credit cards, and cleaning up any errors you might have on your credit score.

Income and Employment Stability

For the most part, mortgage lenders want to see that you have stability with income and employment. This makes you look more favorable than those who are only part-time or not making ends meet. They like to see stability for at least 2 years. When it comes to self-employment, lenders will be stricter. Make sure you have some stability before you apply for a mortgage.

Income to Debt Ratio

Debt to income ratio is available in two forms. The back-end, which measures all monthly minimum debts and the new house payment, and the second way is the front-end which focuses more on housing costs which excludes other debts. Banks typically want to see a front-end estimate of less than 28% and for the back-end, a ratio of 36%.

Down Payment

For the most part, a down payment of 20% will be required in order to ensure you get the best rates. Mortgages are typically price adjusted depending on the risk factors and this means a loan with a 5% down payment is considered to be higher risk than one with a 20% down payment. The more you can put down the better rates you’ll get.

Cash Reserves

When it comes to the mortgage world, cash reserve is measured in the terms of months’ worth of your house payments you have already saved in cash. This reserve will include money you have saved in both checking and savings accounts, certificates, deposits and money market funds. However, it won’t include retirement plan funds.

The standard is two months that mortgage lenders like to see-meaning you have enough liquids cash after closing to cover the new mortgage payment. On higher mortgages the cash reserve might need to be higher.

A few other tips you might want to try include:

  • Deciding how long you plan on having the loan
  • Contact a few different lenders
  • Put a little more money down
  • Purchase single-family homes
  • Interview lenders

These tips can really help you get the best mortgage rate for your upcoming home purchase. Getting a mortgage can be tricky these days, but these tips can help you get the best rate and help you get qualified faster.

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