4 Tips To Qualifying For A Favorable Mortgage Rate
Posted on: 17 September 2014
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Buying a house can be an exciting time in life. Many first time homeowners are confused about what sorts of factors contribute to them qualifying for a mortgage and what determines the amount they qualify for and their interest rate. Here are some of the common factors that play into your loan.
1. Education
When the mortgage company is looking at your loan, they will want to make sure that you are not a huge risk. Someone who has a good deal of education is more likely to find a job easier than someone who has little credentials. For instance, they will be more favorable about lending to a doctor, than they would to lending to someone who doesn't have a high school degree.
If you have advanced degrees, such as college or graduate degrees, make sure that your mortgage lender knows. This could help make your application stronger.
2. Length Of Employment
People who have more stable employment are less of a risk than those who are newly employed. This is why many lenders will ask for 1-2 years of employment history. They want to make sure that the job that you are in can be a viable long-term solution so that you won't be unemployed in the near future without the ability to pay your mortgage payments.
3. A Sizeable Down Payment
Having a sizeable down payment makes you less of a risk than someone who is putting nothing down. This is because if you end up defaulting on the loan, the bank can take the down payment and use it for collateral, in addition to selling the house.
Some lenders will allow first time homebuyers to only put down 3% on the house, but in most cases, conventional mortgages look for somewhere in the 10-25% range. The higher you get, the more likely you are to qualify for the mortgage quickly and get a better interest rate.
4. Rental History
One of the best things you can do to prove you can pay your mortgage in a timely manner is your rental history. If you have been renting for years before you try to buy, the lender will look at your rental history and see if you have paid your rental payments on time. If you have never missed a payment, or never been late, you are more likely to qualify for the loan.
By doing these simple things you can be prepared to qualify for the best mortgage rate possible from a bank, like McHenry Savings Bank.