Shopping around for the best mortgage loan rate can be a good or bad experience, depending on how you go about it. If you go in blindly, with no idea about the current mortgage rate or your credit, chances are that you'll end up making bad choices. But a little background knowledge can help you fix your credit and get the best rates possible.
What's My Credit?
These rates depend upon how good or how bad your credit rating is. If you have no credit history or a bad credit, it's still possible to find lenders who will offer you a second mortgage rate. But the interest rates will be exorbitantly high. This might seem unfair but look at it from the lenders' point of view-a bad credit rating means that they have no assurance that you'll be able to pay them back.
The first step in getting the best mortgage loan rate is to find out what your credit ranking is. There are three main credit reporting agencies- Equifax, TransUnion and Experian. You can get one free report from each of them every year and online facilities are also available. And what exactly goes into a credit score? Your ranking will be determined by your unused credit lines, loan accounts and your current debt rate. Your overall score will be somewhere between 300 and 850. You can expect to get good interest rates if you score above 700-in fact, the closer to 850 your score is, the better your rates will be.
So what happens if your credit rating isn't above 700? In fact, what happens if it falls somewhere below 300? Don't worry- majority of people end up with a credit rating that falls between 100 and 650. The good news is that you can take steps to fix this. You don't have to pay up all your debts right away-all you need to do is set up some payment plans for yourself. Keep a certain amount of money on your credit cards and make sure you make your payments regularly every month. This will show your potential lenders that you are serious about maintaining your finances.
Apart from finding the best mortgage loan rate, you can also speak to your lender about an adjustable mortgage rate. Lender rates will vary so try and shop and compare as much as you can. Look into both fixed and variable interest rates as well as how long the loan will extend for.
Remember that it's not enough to just get the best mortgage loan rate-make sure that you keep making your payments on a regular basis. This will continue to improve your credit ranking and make a good impression on your lender.