Taking out a mortgage can be a very stressful time for many homebuyers. Finding the best mortgage loan for your financial situation requires doing your homework and researching mortgage lenders. When you compare loan offers from lenders it is important to compare all aspects of the mortgages you consider, not just the interest rates. This comparison will allow you to determine what fair interest rates, fees, and closing costs are for your situation.
If you have bad credit you can expect to pay higher interest rates and fees than homebuyers with good credit ratings. There are a number of factors other than your credit that affect the interest rate including your down payment amount and the number of points you pay at closing. The larger your down payment, the better your rate will be. You can also negotiate with the lender to pay discount points and buy down your interest rate.
The debt-to-income ratio and the loan-to-value ratio of your home is another important factor mortgage lenders consider when approving your application. Your debt-to-income ratio is derived from the amount of your debts (student loans, car payments, credit cards, etc.) and your income. The lower your debts are and the higher your income, the lower your interest rate will be.
The Internet is an excellent tool for comparing loan offers from a variety of mortgage lenders. Using the Internet you can quickly locate and compare rates and fees from dozens of mortgage lenders. Comparing offers from a variety of these online lenders will help you find the best loan offer. Remember that you need to compare all aspects of the mortgages you consider, not just the interest rates. Request a copy of the Good Faith Estimate for each loan you consider and compare all lender fees and closing costs to determine which loan is more competitive.