Buying your first house can be difficult. Finance and mortgage companies look at things from a unique perspective. As lenders, they want to have the assurance of repayment. The borrower should show proof of their capability to pay on time. Additionally, the borrower has to have a credit history. In Utah, mortgage loans follow the same procedure for loan approval.
Improving Your Standing
Mortgage rates are based on the property value and the lender’s financial standing or credit score. The only thing that the lender can improve on is the credit score. If any financial institution looks at your credit score, it takes a hit. If you apply for different kinds of loans, your credit score will decrease. However, if you have no outstanding balances on your credit cards or your loans, your credit score improves. Improving your credit score can help with negotiating the mortgage interest rates. These rates are lower for people who have a good credit score because they are perceived as low risk. A credit score of 760 will get lower interest rates compared to someone with a score of 620. The difference could be as much as 1.5%, which could translate to more than $100,000 in interest over the loan repayment period.
Bigger Down Payment
Try to put up a large down payment. If you have a down payment equivalent to 20%, you won’t have to pay for mortgage insurance. Additionally, the monthly mortgage payments will be significantly lower due to the lower interest rate. A 12% down payment results in a larger mortgage amount. This leads to higher monthly fees, including mortgage insurance. This can be a significant amount of cash paid in interest fees over the life of the loan.
Mortgages are personal loans, and their interests are calculated with many factors. You can take advantage of these factors and end up with more affordable mortgage payments.