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Best Home Loan Rates - Steps to Secure the Best Mortgage Rate

Are you looking to purchase a new home? Maybe you are wondering if refinancing your current mortgage is a good idea. If so, you will want to do your homework to make sure you are getting the best rate you can for your situation. There are various factors that play into the lenders decision on whether they will make you a loan and what rate they are willing to give you.

Your Credit Score

If you don't know what your credit score is, you will want to find out. There are online services where you can find out what your credit score is. The better your credit score, the better chance you have of getting a Best home loan rate. If your credit score is not where it needs to be to get the loan or to get a good rate, you may want to do some credits repair prior to getting your Best home loan. There are many credit repair companies that can guide you as to what how you can best clean up your credit and raise your credit score.

Income

The lender is going to want to verify that your income is sufficient to make the monthly payment. They will look at your sources of income as well as how long you have been getting the income to decide if they can rely on that income for the loan payment. If you are self employed, they will be looking for a longer track record than if you are employed and receive a pay check. The information the lender will want to see includes: tax returns, pay stubs, bank statements

Debts and Obligations

The lender will look at what your current debts and obligations are. They want to verify that with the income you have coming in, you can comfortably afford their payment on top of the other debts. You will want to clean up any small debts or collection accounts prior to applying for your loan. This will help your debt ratio as well as your credit.

Once you have put your information together for the above areas, you can shop around to see you can give you the Best home loan rate for your situation. There are companies who specialize in taking your application and placing with the right lender who can best service you. This can be a very good way to go because you don't want to get too many lenders pulling your credit as this can lower your credit score and ultimately hurt the rate that you qualify for on your home loan.

Article Source: http://EzineArticles.com/4705911

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Home Loan Interest Rates - The Basics

Applying for your first home loan is a big financial step. Depending on the type of mortgage you obtain, the Housing loan interest rate you secure and the length of your mortgage, you can drastically affect the total amount you pay by the time you make that final house payment at the end of the loan term.

In this article we'll cover the basics of mortgage characteristics and then go deeper into mortgage interest rates to cover how they affect your mortgage and total cost of borrowing.

There are four factors that can affect the characteristics of your mortgage - they are:

1. Interest. The interest rate is basically the percentage of the loan that your lender charges you to borrow money from them. Your interest rate, whether varied or fixed, will affect your cost of borrowing. Essentially, a higher interest rate equals a higher monthly and overall cost.

2. Terms. Most mortgages have a maximum term that typically hovers anywhere between 15-30 years. It can be shorter or longer, but that's the standard for most home buyers.

3. Payment frequency. How much and how often you pay will affect your mortgage costs. Some homeowners opt for weekly payments because they can squeeze in one or two extra payments a year, thus reducing the length of their mortgage.

4. Prepayment options. Some mortgages allow you to pay off your mortgage early, while others restrict prepayment or put a penalty on early payment.

Of all these, interest is typically the most important. Depending on your mortgage, your interest rate can fluctuate with the market (variable or floating rate) or it can remain the same for the duration of the loan (fixed rate).

A fixed rate mortgage retains the same Housing loan interest throughout the course of the loan. Homeowners benefit because they're given a fixed monthly payment that they can effectively budget for and it won't change with the market. However, because the interest rate risk is placed on the lender, fixed rate mortgages tend to have a slightly higher interest rate.

A variable rate or floating mortgage changes its Housing loan interest depending on the economic index and federal interest rates. While borrowers will typically get a lower opening interest rate, they're subject to the tides of the market. Overall, variable rate mortgages tend to be cheaper than fixed rate loans, but homeowners need to remember that they are at the mercy of the market.

Housing loan interest rates aren't the same for everyone, meaning you may not get the same rate as your neighbour. Lending institutions base their rates on the borrower's credit score, meaning a higher score typically translates to a better rate. Before you commit to any interest rate, always shop around and don't be afraid to negotiate with a lender for a better rate.

Article Source: http://EzineArticles.com/1025632

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