This guide covers mortgage rates and terms compared to credit scores and loan-to-value. Homebuyers planning on buying a home should prepare way ahead of time when preparing for a mortgage to get the best mortgage rates and terms. Mortgage applicants can take certain simple steps to maximize their credit and get the best mortgage rates and terms.
How To Get The Best Mortgage Rates and Terms on a Home Loan
This section will cover the steps to prepare for a home loan to get the best mortgage rates and terms. Consult with a mortgage professional as soon as possible. This holds even if you are not planning on buying a home soon. Get multiple opinions from multiple loan officers. Choose a loan officer with whom borrowers feel comfortable. Realtors and mortgage lenders refer each other to clients, and loan officers should get along with realtors.
Credit Scores Is Key In Getting the Best Mortgage Rates and Terms
Just because borrowers are pre-approved for a mortgage loan does not mean they have the best mortgage rates and terms. This has nothing to do with which mortgage lender a mortgage loan applicant uses. It can be a bank, mortgage banker, or mortgage broker.
Low credit scores yield higher credit scores. There are quick fixes to maximize credit scores. The best mortgage rates and terms will be quoted to borrowers with a 740 FICO and higher credit scores.
For example, if the borrower has a credit score 615 and has been pre-approved with a rate of 4.5%, that does not mean the borrower has the best mortgage rates and terms. Generally, mortgage rates will be higher for borrowers with credit scores below 620 FICO. There are pricing adjustments. There are normally pricing adjustments for every 20-point drop in credit scores. Borrowers with scores under 600 FICO will get the worst mortgage interest rate pricing hits.
Credit Repair During Mortgage Process
Always consult with the loan officer before repairing credit. Credit Disputes are not allowed during the mortgage process. Medical and non-medical credit disputes with zero balances are exempt from credit disputes. If there are errors and inaccuracies on a credit report, have the loan officer do a rapid rescore. A rapid rescore can be done by loan officers and only takes three to five business days. Once a credit dispute is initiated and mortgage applicants have credit disputes on credit disputes, the mortgage process abruptly ends.
Credit Disputes Are Not Allowed During Mortgage Process
Credit Disputes need to be retracted for the mortgage process to proceed. Consulting with a loan officer should be the first step for any homebuyer. Homebuyers should consult with loan officers way ahead of shopping for a home. Getting pre-approved is one thing, but getting the best mortgage rates and terms is another.
Loan Officers will offer pre-approved borrowers options on the benefits of improving credit scores for better mortgage rates and terms.
Borrowers with borderline score cutoff for a better rate and help them improve their credit scores. Improving credit scores can be as simple as paying down some credit cards, taking authorized users off credit if the main user has maxed out credit cards, or adding new credit with secured credit cards. Borrowers without active credit tradelines can easily boost 30-plus points by getting secured credit cards. HUD guidelines on collections and charge-off Accounts do not require Borrowers to pay outstanding collections and charge-off accounts. Deleting older collections and charging off accounts will have little or no impact on credit scores.
How Long Does It Take To Increase Credit Scores
Credit scores can be boosted in 45 days. If it is paying down credit card debts or getting another secured credit card to boost their credit scores, we must wait 30 days. This is because the credit reporting agencies report the new balance or credit tradeline on their credit. We can proceed with the mortgage application after the credit reporting agencies have updated the borrower’s new credit profile.
Qualifying For Best Mortgage Rates And Terms
If you are seeking a mortgage loan for a home purchase or a refinance loan in, Gustan Cho Associates Mortgage Group can help. Please get in touch with us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.
