The home buying process in Long Beach, California can feel both exciting and miserable at the same time. One aspect providing misery is the mortgage loan approval process. From gathering paperwork to dissecting numbers and decimal points, the financial aspect of home buying is quite daunting. One of the major things to focus on is getting the lowest interest rate possible. It sounds frightening to march into a bank and ask for a low rate. However, with a little preparation and prior knowledge, you can confidently approach your lender with your request for a lower interest mortgage rate. Here are four little known ways to get approved for a lower interest mortgage in Long Beach, California.
Fix or Improve Your Credit
Mortgage lending is all about tiered pricing these days. Simply put, the higher your credit score is, the lower your rate will be. The most leverage you will ever have against a lender, outside of not needing their money, is a high credit score. A score of 760 puts you into the category that will offer the lowest interest rates.
If you have a credit score below 760, it would be beneficial to find ways to improve your score as quickly as possible. One such way is to ensure your debt to income ratio is in a good place. If you have significant amounts of credit card debt or other bills, go ahead and work on paying those off before applying for a mortgage. Speaking of, the current debt to income ratio is a major factor for a mortgage lender so it is important to have that resolved either way.
Prepare a Quality Down Payment
Like your credit score, the higher your down payment, the lower interest mortgage you will be able to get. Mortgage lenders weigh the risk of every application. One way to make the lender feel more comfortable offering a lower interest rate is to offer a 20% down payment. Anything less than that is viewed as carrying more risk for the lender.
Have Spare Cash
Mortgage lenders love to see money in a savings account on a loan application. It cannot be in a retirement fund or other types of investments. It must be cold, hard, and available cash. This makes a lender confident that you can pay for your mortgage for a couple months, simply with the cash you have available.
Do Your Research
Finally, researching your lender is vital to getting a lower interest mortgage rate in Long Beach, California. There are several websites available to assist in looking for local lenders with great rates. A little homework goes a long way as there are lots of options available out there. Like many aspects of buying a home, the first option may not always be the best option.
