STILL-LOW MORTGAGE RATES PROMPTING PURCHASES AND REFINANCES
With mortgage rates hitting all-time lows—and likely to remain low throughout the summer—the prospect of reduced payments is spurring many borrowers to lock in lower rates. According to the Mortgage Bankers Association, mortgage borrowing is at its highest level in three years, with the dollar amount of mortgage originations expected to rise almost 7 percent this year from 2015. But while low rates can mean substantial savings, first you have to qualify. Here, some tips to help you get the lowest mortgage purchase and refinance rates possible:
- • Borrowers should have a clean credit report and a FICO credit score of 740 or higher to obtain the lowest interest rate. Scores below 680 will make it more difficult to qualify. Consumers are entitled to a free credit report every 12 months from each of the credit bureaus: Experian, TransUnion and Equifax.
- • Paying bills on time and paying down your credit card balance can reduce your debt-to-income ratio, which improves your chances of qualifying for a low mortgage rate. Make sure your debt-to-income ratio is 36 percent or lower.
- • Make sure that the savings on your principal and interest payment aren't offset by any additional charges involved with securing a new mortgage. Online quotes sometimes can be too good to be true, often adding in a lot of extra hidden fees like loan points paid to lower the interest rate even further. Next, determine how long you will have to stay in your home to regain those expenses with your monthly savings. Then, divide those costs by the projected annual interest savings.