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Personal Finance -
Mortgage
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Written by Omie Ismail
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Friday, 11 September 2009 15:57 |
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Page 1 of 5
Getting a cheap mortgage has gotten is much easier with the Internet. You have the ability to research rates, submit applications, and get a quote within minutes or hours. However, getting a great rate means you have to be ready. Here are some basics that you should know:
1) Your FICO score is the single most important factor in determining the interest rate you will be charged. If you want the rates that everyone is touting keep your FICO above 720. Don't know your FICO you can check Experian or one of the other rating agencies to get your latest score. If you don't know your score, don't apply for credit.
If you have a poor score you should work on improving it before you decide to buy a house. Buying a house at a high interest rate is financial suicide as Low Interest Loans - They Make a Huge Difference points out.
2) You need to know the exact amount that you are going to get for a loan. If you are buying, you are going to want to have 20% down for your down payment to get the best rates. Less than that and you will face Private Mortgage Insurance which will increase the cost of your loan and many lenders will charge you higher rates. If you don't have 20% down, you might want to rethink whether you should be buying a house. There's nothing wrong with renting and continuing to save up for your down payment. Your 20% needs to be someplace (not daddy's pocket) where lenders can verify it has been there for a few months.
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