Even if you try hard to get the most attractive rate and term for a mortgage, you still might only end up with the most favorable option available for someone in your situation rather than with the best option available in the marketplace.
In fact, depending on various factors, the difference between your rate and a superior rate could be numerous percentage points.
Since even a single percentage point difference can make a difference over the long haul, it’s in your best interests to learn about the obstacles to getting the best mortgage rates. Read on for some tips that will help you get ahead.
Low Credit Score
If your credit score is south of 680, you’ll fall short of the threshold needed to secure the best interest rates available. It’ll be even worse if, in addition to a low credit score, you also lack the ability to come up with a substantial down payment. Having good credit though, won’t be enough. You’ll also need to demonstrate a 24-month period of good credit with zero major delinquencies.
Duration of Rate Hold
Since the general rule of thumb is that the lowest interest rates tend to be available for so-called quick closes, you will only be able to benefit from this general policy if you hold a rate for less than a month.
When it comes to getting the best rates, your income will be a factor. If you’re your own boss or cannot easily provide proof of stable income over a number of years, you may very well miss out of the most attractive rates. In addition, some lenders will insist that you table a larger down payment.
Higher Risk Properties
Another factor that can impact your rate is the nature of the property you are interested in purchasing. For example, there are lenders that will assess higher rates for condo units, cottages, and big multi-unit residences since these sorts of living spaces are viewed by some lenders as higher risk, non-standard properties.
All in all, it is very much possible to get a compelling mortgage rate if you’re willing to do a bit of searching, but as you’ve seen from the aforementioned points, there are some hurdles towards getting the best mortgage rates. Consider the aforementioned points and compare them to your own situation to ascertain whether or not you’re likely to qualify for the best rates.