Snagging the lowest mortgage rate is the ultimate win for a homebuyer. It not only means a lower monthly payment over the life of the loan but for some buyers, it could also open the door to a large or more expensive property.
But qualifying for the lowest mortgage rates in Houston is not easy. It takes some works. However, what are these? What do you need to do? Here is a guide that you can follow –
- Maintain a good credit score
The foundation of getting a low mortgage rate begins with keeping your credit score as high as possible. Mortgage lenders look at your credit score as a roadmap to your creditworthiness. A high credit score reduces worries that you will eventually repay your loan, while a low score could tempt lenders to charge you a higher mortgage rate, or not lend you at all. Although three major credit bureaus in the U.S. are secretive about how their scores are calculated. FICO credit scores are generally calculated as follows –
- 35% is based on your payment history, so, make your payment on time
- 30% depends on your credit utilization, meaning you do your best to keep your aggregate utilization under 20%, if possible
- 15% is based on length of credit history, therefore, avoid closing accounts that you have had for a long time that are in good standing
- 10% is based on new credit accounts that mean you should open new accounts only when it makes senses to do so
- 10% is based on credit mix that means lenders want to see you can handle different types of loans
- Have a long and consistent work history
Along with a good credit score, lenders want to see consistent and long-tenured work history. In case you have been working at the same place for years and have consistent or growing annual income, lenders will be more likely to provide you a home loan with an attractive rate. On the flip, if you have changed your job several times recently, lenders may be reluctant to give you a big loan as income isn’t very reliable. Lenders will check your employment status before you make an offer on a home and before the closing date of a home purchase. If you have changed jobs or quite it during the closing process, it can endanger your ability to get a home loan.
- Shop around for the best rate
One of the smartest moves prospective homebuyers can make is to shop around for the best mortgage rate possible. Due to the advent of the internet, shopping around is much easier nowadays than it was a decade ago. It is easy to compare rates from online lenders to see who is offering the best rates.
A lot of factors come into play when it comes to securing the best mortgage rates out there. The most important things that you can do are getting your credit in good shape, showing consistent work history, and shopping around among different lenders. And when in doubt, get in touch with a mortgage lender for help.