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Mortgage Tips

Shopping for a mortgage can be quite an overwhelming experience. Especially if you are a first time home buyer and have little to no knowledge about the loan process. If you have shopped online you have already found hundreds of mortgage sites quoting low ball rates for every loan term under the sun. One would think that if you just spend a few hours online you will find the lowest rate available and receive the best deal. This is not rarely the case. Don't play the interest rate game without a load of information, Read this first!

Not all low rates are considered equal...

There is a lot more to the cost of a loan than the interest rate. Many lenders will set the interest rate as low as possible and then hike up the number of points and/or fees attached to the loan once you have applied. Most online mortgage lenders will post the number of points next to the interest rate for your consideration. One point is equal to one percent of the total loan amount.

To ensure the best deal, compare the Annual Percentage Rate (APR) of the loan which includes the interest rate, points/fees and closing costs. If you compare companies using this percentage you will find that a lot of the low rate lenders are not the best deal in town.

To compare quotes accurately, ask for the APR instead of the interest rate.

What?!! I don't qualify for that rate?

The most important thing to learn about mortgages is that rates are based on your individual needs and financial situation. The rates quoted over the phone and/or online are not always accurate representations of what you will qualify to receive. Most rates quoted are applicable only for individuals with perfect credit, a low debt to income ratio and either a large down payment or a lot of equity in their house. These qualifying factors are crucial elements to be aware of before shopping for a loan.

1. CREDIT
Your credit history is important to lenders when evaluating your loan. An individual with many late payments will not be deemed as trustworthy for payment terms as someone with perfect credit. Find out what has been documented on your credit report and correct any possible mistakes.

2. DEBT TO INCOME
Lenders use your debt to income to verify that you have the means to pay a monthly mortgage. To figure out how much debt you have compared to your income use the following formula. This number is usually expressed as a ratio. Add up the following Monthly Debts: Mortgage + Auto loans + Student Loans + Credit Cards + Furniture loans + Alimony.
Debt to Income % = Monthly Debts
Monthly Income

3. DOWN PAYMENT
There are several loans availabe with little to no down payment, however, most of these loans come with a higher interest rate. Evaluate your finances and estimate the maximum amount of money you can afford to put down on your new home. Once you have made this estimate, find out how much house you can afford by using the USBankRate.com Mortgage Calculator.

4. EQUITY
If you are looking to refinance, receive a home equity, consolidate debts or make home improvements then you need to know how much equity you have in your house before you apply. Most of the time, the more equity you have the more money you can borrow. To estimate this calculation use the formula listed below:
Equity Ratio = 100% - Loan Amount
Home's Value
Equity $ Amount = Current Value - Loan Balance

5. REMEMEBER WHEN REQUESTING A QUOTE FROM A LENDER YOU NEED TO BE AWARE OF THE FOLLOWING:

a) Locks >45 days usually have a higher rate.

b) If you are waiving escrows, there may be a charge to the rate and / or the points associated with the product you are looking for a quote on.

c) If you are taking cash-out and borrowing >70% of the value of the house, then the rate / points may be higher than quoted on the site.

d) Rates are like the stock market -- they can change every minute of every day based on market conditions. Rates quoted on sites are time-stamped as of the time posted, and are subject to change based on CURRENT market conditions.

e) Remember: it is your responsibility as the consumer to obtain your updated title insurance, homeowners insurance in order to close within your lock period!

The USBankRate.com service connects you with multiple investors in your area that quote rates based on your specific needs and financial situation. These investors have competitive rates, can handle less than perfect credit and low down payments, and are ready to quote your mortgage within the next 48 hours. Request your FREE USBankRate.com EVALUATION today!


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