Secure the Best Mortgage Rates for Your New Home
When it comes to home financing, all borrowers want to secure the best mortgage rates possible. When you are knowledgeable about what affects interest rates, you can better prepare yourself to secure a great rate. The Boise River Lending team has worked for a long time in the mortgage market in Boise, Meridian, Twin Falls, Treasure Valley, Magic Valley, and nearby Idaho. You are not alone in the journey to securing home financing. Our loan officers work arduously to educate our clients on different factors that affect their rates and other specifics related to their financing options. When you’re ready to explore the mortgage options available to you, contact Boise River Lending for more.
Below, we’ll explore several factors that can help or hinder you in securing the best mortgage rates. These factors, along with fluctuations in the Boise housing market, determine what rates you can hope to achieve at any given time.
Improve Your Credit Score
The better your credit score, the better interest rates you can secure. If you can achieve a score of 760 or higher, you can get some of the best rates. While improving your credit score isn’t an exact science, there are some general rules you can follow that will make a difference over time. First, it’s important that you make payments on time consistently, not only on credit cards, but also on your rent, etc. You also need to try to get your debt-to-limit ratio low; that is, you should try to use less than 40% of your available credit limits. A final tip to achieve a high credit score is simply to monitor your score closely. There are several free websites where you can check your scores from the three main credit companies, and many credit companies offer a free look at your scores as well.
Keep Debt Low
Just as keeping a low level of debt can contribute to a good credit score, it can help you secure a great interest rate. As part of your approval process, we’ll explore your debt-to-income ratio currently and what it will be with the additional monthly mortgage payments. A good goal to shoot for is a 36% DTI with your mortgage and other debts included.
Make a Larger Down Payment
Of course, it would be great to secure a great interest rate and a minimal down payment. However, when you are flexible about different parts of your mortgage, you can sometimes improve others. Putting down a down payment of 20% or higher can not only give relief for private mortgage insurance costs, but can also lower your interest rate. If you are unable to collect enough for a down payment, you may not receive the best interest rate. Government-backed loans like FHA loans and VA loans, for example, have as low as 0% down payment available, but typically have higher-cost interest rates.
When you begin to look honestly at your finances and credit score, you can identify areas of your life where you can make changes to improve your financial standing. By making certain steps to minimize debt and take control of your finances, you in turn set yourself up for the best mortgage rates. To learn more about securing a great mortgage with the best rates and terms for your lifestyle, contact Boise River Lending. Our team works with clients in Boise, Meridian, Twin Falls, Treasure Valley, and Magic Valley, and we’re ready to talk with you.