If you’re looking at Davie real estate, it’s possible that you will finance your next purchase. The mortgage rate and terms you are offered will depend on a number of factors. Mortgage lenders are looking for the best buyers just as you are looking for the best lender.
Mortgage rates can vary by several percentage points, so it’s important to be as well-qualified as you can. Here are some of the most important factors lenders will look at, so the more you know about them, the better off you’ll be.
- Your Credit Score. This is one of the main criteria a lender will use to determine the rate they will offer to you. According to BankRate, if your score is 740 or over, you’ll usually qualify for the best rates. If your score is 620 or lower, you may have a difficult time getting a mortgage at all. Find out what your credit score is and how to increase and protect it while you’re house hunting.
- Your Employment History. Lenders would like to see a stable employment record, especially in the two years before you apply for a mortgage loan. If you haven’t been employed steadily, consider the timing for your home purchase. If you are strong in a number of other categories, you may be able to overcome this issue. If you think it will be a problem, it may be better to wait until you can establish a solid resume.
- Your Debt-to-Income Ratio. If you have $1,000 in monthly payments debt, including a mortgage payment, and you make $4,000 per month, your debt ratio is 25 percent. Lenders view the ratio in different ways. As an example, for an FHA loan, a ratio of 43 percent or less is critical. Keep in mind that the lower yours is, the more likely it is that you’ll get good rates.
- Your Down Payment. Since the real estate bubble a few years ago, lenders are very careful about making sure that their loans don’t fall into a high-risk category. One factor that can help or hurt you is the amount you will put down on a house purchase. Twenty percent or more may help you to balance out some negative factors you’re facing and get you a good rate. If you’re planning on a 5 percent down payment, keep in mind that you will probably pay a higher interest rate.
- Your Cash Reserves. The standard requirement for cash reserves is usually enough cash to pay the mortgage on your Davie home for two months. If other factors put you in a higher-risk category, you may be required to have more of your reserves in cash.
As you can see, all of these factors impact and are impacted by all the other factors. If you have questions about how qualified you are, call us at 954-242-8030 or drop us an email. The key is to choose the mortgage lender that is best for your situation. We can help by referring you to lenders who will work hard to help you get a home mortgage. We can also help you by identifying Davie real estate that meets your needs and budget.