Landing A Premium, Low-Interest Home Loan

: Chris Lee Law Firm

  Filed under: Refinancing

mortgage loan approvedWith the Fed prime rate set to remain low for the next couple years, you can expect to continue to hear from banks and other lenders about the glories of refinancing a mortgage. To lock in the super-low rate, there are a few best practices that should help you get a lower interest loan or refinance your current one.

Maintain a good credit score

An ideal FICO score is above 720. Without that, don’t expect to get one of those golden number interest rates below 5% on your house or new mortgage. If you need to quickly build credit, pay off existing debts. If you are unable to pay your debts you can request a credit card negotiation to lower your principal amount owed as you repay your debts. This is known as credit utilization and maximizes your credit by improving your debt to credit ratio. It is important to remember that FICO records your credit based on a number of different factors. Besides paying all your debts off on time, you need to establish ‘healthy’ patterns of borrowing and spending as a borrower.

Borrow reasonably, have 20% or more of your home’s equity

It’s a good practice to have 20% of the equity of your home ready as a down payment. Creditors see that as good faith, and you won’t be up a creek later on. Many owners who bought subprime homes paid little to nothing on their down payment—this practice was a key factor precipitating the consumer and bank debt crisis. Begin owning your home from day one.

What’s more, home loans that exceed $625K are known as jumbo loans and aren’t secured by Fannie and Freddie. These loans typically have much higher interest rates. Buy within reason, and you can save big in monthly interest.


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