A staggering majority do not have the financial means to purchase or renovate a property with upfront capital. That’s where a mortgage comes into play. Whether you’re planning to buy your first home, make changes to an existing one, or invest in a rental or vacation property, your next mortgage can help you achieve your objectives.
You’ll need to secure the best and most feasible mortgage rate in your state to get there. For example, knowing the rate and conditions of your mortgage in Colorado Springs are vital. To your expenses. Doing so can significantly impact the overall amount you spend. Reduce your interest rate by a percentage point or two, and you’ll save thousands of dollars in interest on your loan.
When it comes to your next mortgage, it’s a good idea to put yourself in the best possible position to ace the loan application and get the most excellent rate. Below are some effective ways you can ensure your next mortgage rate is optimal.
Focus on Improving Your Credit Score
A bad credit score won’t prevent you from getting a loan, but it can mean the difference between getting the best rate and being saddled with more expensive terms. Generally, the lower the interest rate, the more confident the lender is in your capacity to repay on time.
Be punctual in paying your bills and strive to erase your credit card balances to enhance your credit score. If there is a balance, keep it to no more than 20 percent to 30 percent of your available credit limit. Watch your credit score closely, report regularly, and look for errors. If you uncover any problems, work to straighten them up before applying for a mortgage.
Prepare Your Employment Record for the Lenders
If you can establish at least two years of consistent employment and wages, especially from the same employer, you’ll be more appealing to lenders. Prepare to provide pay stubs from the last 30 days and W-2s from the previous two years when applying for a mortgage in Colorado Springs. If you get incentives or commissions, you’ll need to submit documentation of that, as well.
Qualifying can be more challenging if you’re self-employed or have many part-time jobs, but it’s not impossible. If you’re self-employed, lenders may require you to submit business records such as profit and loss accounts in addition to tax returns to complete your application.
If you’re a fresh graduate or have a new job lined up, lenders can usually verify your employment if you can show them a formal job offer. Breaks in your job history will not automatically disqualify you, but the length of those gaps is essential.
You might be able to explain the gap to your lender if you were unemployed for a brief period. However, it can be difficult to obtain approval if you’ve been unemployed for six months or more.
Consider a 15-Year Fixed-Rate Loan
While most applicants go for 30-year fixed mortgages, consider a 15-year fixed-rate mortgage if you think you’ve located your long-term home and have adequate cash flow. If you’re refinancing your current mortgage, you can also choose a 15-year term. According to Bankrate’s national survey of lenders, the benchmark 15-year fixed mortgage rate is 2.510 percent.
Choose to Lock In Your Rate
The closing process can take many weeks, during which time rates can change. Request your lender to lock in your rate once you’ve signed the house purchase agreement and secured your loan. The service may charge a fee, but it may pay for itself if rates rise.
When looking for the ideal mortgage rate, do your homework to ensure you’re getting the best deal for your needs. Don’t accept the first-rate you’re quoted. It pays to look around first. Look beyond your bank, talk to various lenders, and explore choices online.
If you need a home loan in Colorado Springs, you can rely on Total Lending Concepts. We offer home loans to fit every situation, providing a wide variety of loan options like conventional, VA, USDA, FHA, and other options to fit your needs. Visit our website today to get a consultation!