What buyers can do to get the best mortgage rate
Mortgage interest rates have been headlining
MEMORIAL DAY DISCOUNT • MOSQUITO & TICK CONTROL
SPECIAL EVENT SPRAYING
MOSQUITO BARRIER
15% OFF
516-321-0606
Quick & Easy
FREE
ESTIMATE
412 Ronkonkoma, Lk. Ronkonkoma, Holbrook - May 2024 - To Advertise in LivingLocal, Call: 631-698-8400
755821-1
fi nancial news segments for several years running.
Much of that news has been met with less
than open arms, as rates have risen dramatically in recent
years, an increase that is related to the ripple effect of the
COVID-19 pandemic.
Mortgage interest rates did not immediately spike after
the World Health Organization declared a global pandemic
in March 2020. In fact, data from the lender Freddie Mac
indicates mortgage rates were still well below 4 percent on
January 1, 2022. However, those rates hovered around 7
percent by the end of that year, and were still around that
level at the start of 2024.
With such high interest rates, it’s understandable if prospective
home buyers feel helpless. However, there’s much
buyers can do to help themselves as they seek to secure the
lowest mortgage interest rate possible.
• Read your credit report and improve your score, if
necessary. Many prospective home buyers save up for
years in anticipation of the day when they will purchase
their own home. During this period, buyers can read their
credit reports and address any discrepancies while taking
steps to improve their credit scores. Lenders consider a
host of variables to determine an applicant’s credit worthiness,
and credit history and credit scores bear signifi cant
infl uence. The higher an applicant’s credit score, the more
favorable mortgage rate he or she is likely to get.
• Take control of your debt-to-income ratio. Debt-to-income
(DTI) ratio refers to what you owe in relation to how
much you earn. The lower your DTI, the better you look to
lenders. According to Bankrate, lenders typically want to
avoid issuing mortgages to individuals if the monthly payment
will exceed 28 percent of their gross monthly income,
and people who may be near that threshold for a given
home may be denied a mortgage if their DTI is high. Prospective
home buyers currently carrying signifi cant debt,
including consumer debt like credit cards and/or student
loan debts, should make a concerted effort to pay down that
debt prior to applying for a mortgage. Prioritize paying off
consumer debt before applying for a mortgage.
• Maintain a strong employment record. Steady employment
and consistent earnings make mortgage applicants
more attractive in the eyes of lenders. If you are currently
shopping for a home or about to make an offer, now
might not be the best time to switch jobs. Self-employed
individuals and freelancers working multiple jobs can still
qualify for a good mortgage rate, but they may need to
provide more extensive documentation that indicates their
earnings going back several years. Individuals who have
been working full-time for the same company for years
may only need to provide W-2 forms from the two most
recent tax years.
• Shop around for rates. Rates may not fl uctuate much
between lenders, but it’s still worth shopping around for
mortgage rates. A study from Freddie Mac found that the
benefi ts of shopping around for a mortgage rate were especially
notable in 2022 compared to the decade prior, saving
borrowers who took the time to shop for rates substantial
sums of money.