Lenders Have Learned That The More Money

Lenders Have Learned That The More Money

Lenders have learned that the more money you put down on a home, the less likely you are to default. So ask if you’re near a cutoff point. If adding a few thousand dollars would lower your rate by a quarter-point or more, consider dipping a little further into your savings.

Reduce your debt. Lenders look at the total amount you owe and your monthly payments. They want to be sure that you can afford to make all of your current payments and the new mortgage payment they are about to pile on top of that. Reducing your debt load will also improve your credit score, especially if your credit card debt is bouncing up against your credit limits. Your goal should be to reduce those balances to less than 50% of your available credit.

Don’t apply for new credit cards or other consumer loans. That prompts those potential lenders to check your credit report. When they do, those inquiries are noted on your history and they can lower your credit score by up to 12 points.

Shop around. Get realistic quotes from at least three lenders. It’s particularly important that you don’t limit yourself to your bank, existing lender, or the mortgage broker in a nearby strip mall. Our extensive database of mortgage rates is a great place to start looking for the best deals. If a lender won’t honor the rates quoted in our comparison charts, we want to hear about it.