Mortgage Tips

Before applying mortgage, there are tips for you to get a better deal. You can save thousands of dollars by having the right information, and applying what you know.
• Understanding Your Credit Scores. Before you apply your mortgage, you should know your credit scores. It’s the critical number for your mortgage application, because it determines your rates. In the U.S., most credit scoring systems rank everyone on a scale from 400 to 850 points. A credit score tells mortgage lender, how risky you are on paying back. If they consider you would have difficulties on paying the credit, they will give you higher rate, to compensate their risk on giving you mortgage. A credit score over 700 usually will you get good rates. There are things you can do to increase your credit score. Basically you are trying to convince the lender that you can pay on time. You can reduce your credit balance around 30% of your credit limit, and paying all payments on time. The important thing is that you don’t applying unnecessary application for credit. The much you owe, the riskier you are. You should check your credit score 3 months before your mortgage application, so that you can fix your scores to get good rate.
• Understanding how much you can borrow. Mortgage lenders will look at your debt-to-income (DTI) ratio to determine how much they will lend you. This ratio is calculated by dividing pre-tax income by the amount you use to pay off debts. To get more credit, you should try to lower DTI.
• Understanding Down Payment. Your down payment will also affect your credit rate. It’s especially common for first-time borrowers to buy a home with little or zero down payment. The more down payment you pay, you less you will have to borrow. That means, you are taking less risk and mortgage lender can gave you lower rate. In order to have lower rate, you can increate your down payment or buying less expensive house so that you can increase the down payment for that house.