What You Need To Know About Finding The Best Mortgage Rate

There's a lot of talk nowadays about low, better-than-ever mortgage rates. But exactly how do you get these phenomenal rates that everyone's talking about?

If you've applied for a mortgage before, you may remember the process and what criteria is needed; however, if you're a first-time home buyer or if it's been a while since your last home purchase, you might need some help.

The first thing you need to know about finding a low rate is how lenders determine your qualifications. Firstly, your credit score will be analyzed by one or more credit bureaus. If you have a favorable score, do your best to keep it that way by not closing out any lines of credit or applying for new credit. If your credit could be better, you might want to wait a little while before applying for a mortgage and use that time to improve your score.

The next thing a lender will look at is your debt-to-income ratio. If it's low, you stand a better chance of qualifying for a low interest rate. If you have a high amount of debt, it could be in your best interest to pay some of it down before applying for a mortgage.

Lastly, your lender will want to know how much money you have to put down. Generally speaking, 20% is a good amount to have in order to get your interest rate lower. Be that as it may, some loans (such as FHA financing, USDA and VA loans) do not require much, if anything, for a down payment. These special loans will, however, have other prerequisites. Talk to your lender for more information.

Here's something else to keep in mind...interest rates and other terms of a mortgage offer can vary greatly from one lender to another. Shop around and compare several quotes before selecting a lender.