Since the economic crisis of 2008, getting a home mortgage has been a bit more difficult for many home purchasers. In fact, gone are the days of simply signing on the dotted line with no real 
financial qualifications. The good news is, though, that interest rates are, for the most part, still at historical lows. And, because of that, many home buyers can still get a great mortgage rate. Here are some tips for ensuring that you can qualify:
1) Credit Score
When obtaining a mortgage, the lender will typically check into your credit history – and a large part of this is your credit score. Overall, the best rates are usually available to those who have credit scores in the range of 760 or higher. With very few exceptions, you will generally need to have a credit score of at least 620 to qualify for a mortgage – at least through a traditional bank or lender.
2) Income and Employment
Most lenders will also require that you have stable income and employment history. This is because they want to ensure that you will be able to repay the loan. Lenders do not want to end up with the property that they loaned the money on. Therefore, long periods of unemployment will not look good on your application, nor will declining earnings over time.
3) Debt-to-Income Ratio
Another key criteria is your debt-to-income ratio. This is the amount of monthly minimum debt payment, plus your proposed new home payment, divided by your monthly gross income. In the past, a lender wanted to see no more than 28% to 36% on this ratio. However today, this ratio may go higher.
4) Down Payment
Lenders will also typically require that you have at least some amount of down payment. In order to get the best mortgage rate, a down payment amount of 20% or more would be required. By putting down 20% or more, you can also alleviate the private mortgage insurance that is required by lenders.
5) Other Cash in Reserve
Other cash in reserve refers to the amount that you have in savings and / or checking. Here, the lender wants to know how long you could make your house payment in case of an emergency. The more you have here, the better you will look in the lender’s eyes.
The Bottom Line
Getting a good mortgage rate can mean paying a lower monthly house payment – which, over a 30-year period of time, can mean paying a substantially lower amount for your home. For more tips on finding the best rate – and for finding that ideal home – Contact Us.
