Mortgage rates are the rates that are charged by the mortgage lender on the rate of interest. Mortgage rates were relatively low in 2016. According to experts, they could remain low or can be raised as per the situation in 2017. Whether you are applying for a loan or buying new home or car, here are few tips to achieve an excellent mortgage in 2017.
1. Savings in reserve – Mortgage lenders do not want you to diminish your savings on the down payments or the closing costs. These lenders want you to have the reserves in the form of cash or assets to be sold quickly so that it would be easy for you to take care of the unexpected expenses. Your lender will calculate and let you know the estimated reserve which will be required to qualify for a mortgage.
2. Borrow as per needs – Before borrowing, one should remember to borrow within the limit. You should borrow only if you are able to repay on time. Always try to live knowing your limits. Your responsibility of the monthly debt should not exceed 36% of your income before taxes. Suppose you have a higher amount in the bank after closing on the loan, the lender can allow you to accept a higher house payment.
3. Small down payment – It is not mandatory that the homebuyers have to pay a down payment of nearly 20%. Some of the loan providers allow certain deserving people to buy homes with no involvement of down payment. The US Department of Agriculture assures to offer a zero down payment mortgage as a part of its rural development program. Federal Housing Administration insured mortgages offer a down payment which is as small as 3.5 percent.
You need to showcase your patience level during the mortgage underwriting process. Make sure not to charge up your credit card or do not apply to a new credit card while your mortgage is going through the underwriting process. Whenever you apply for a mortgage, the lender makes it a point to take a look at your credit card report and score.–
5. Refinancing – Refinancing back to a 15-year mortgage can help assist you in saving your cash in two ways – 15-year mortgages have a lower interest rate than the 30-year loans. And secondly, you pay the interest for a shorter term.
6. VA loan – Are you eligible for a VA guaranteed mortgage? If yes, then you can refinance a conventional mortgage into a VA loan. In most of the cases, you can refinance up to 100% of the home’s current value.