When buying a home, most everyone knows your credit score is a key factor in obtaining a loan and getting the best interest rate possible. If you are in the market for a home the first thing you should do is work on that credit score.
Mortgage companies will pull your credit score to determine how reliable you’ll be in paying your loan. They’ll check that history to see how ‘on-time’ you are at paying and how much debt you have. If you have a dozen different credit cards that are mostly maxed out, the lender will look at that as a red flag.
Check all your credit reports months before you apply for a loan. You may find errors that you’ll have to dispute. Fighting the errors generally will take months. If you have no luck disputing the errors, contact a credit dispute-credit repair attorney. Not only can your attorney dispute the errors, the attorney can help if you’re being harassed by a collection agency. The money you saved from a lower interest rate may be well worth retaining an attorney.
Depending on what state you live in, some lenders have different interest rates for different states and areas. It’s important you check with multiple lenders to get the best rate. If have a particularly small or large loan, you may pay a higher interest rate.
Typically, the larger your down payment the lower your interest rate will be. If a lender sees you’re paying a rather large down payment they look at you as being a lower risk because you have more ‘stake’ in the property. You may receive a lower interest rate. However, if you can’t make a large down payment, the lender may require you to buy mortgage insurance, sometimes called Private Mortgage Insurance (PMI). This insurance protects the lender if the borrower fails to make mortgage payments. Some lenders will offer a lower rate if you put down less than 20%, requiring the PMI that will lower the risk for the lender. Of course, the larger the down payment, the less you have to borrow.
Usually, the shorter amount of time your loan is for, the lower the interest rate. Again, compare the interest rates and overall costs between a 15-year mortgage and a 30-year mortgage. Your interest rates come down to two basic types: fixed and adjustable. A Fixed rate remains the same over the length of your loan. The Adjustable rate may have a lower monthly payment in the beginning, but you take a chance whether the monthly payment will increase or decrease, dependent on the market.
Compare pricing with Conventional, FHA, USDA and VA loans. Each lender decides what products they’ll offer and the eligibility requirements. The rates can be significantly different.
We are an aggressive consumer law office protecting the rights of individuals. If you need help with your credit dispute or credit repair please call us to find out how we can help. Our Denver real estate attorneys can also assist with any other legal issues you may have when purchasing or selling a home, including closing docs, purchasing or selling a foreclosure home in Colorado, seller disclosure issues, questions concerning your HOA or HOA covenants, and more.
Gantenbein Law Firm also practices law in the following areas: Probate, Business, Tax, Estate Planning, Wills, Trusts, Elder Law, Foreclosure Defense and HOA Defense. For more information on these practice areas, lawyers, or scheduling your consult, please visit www.gantenbeinlaw.com or call 303-618-2122. From their office in Denver, Gantenbein Law serves clients throughout Colorado.