One may need to go beyond comparison shopping in a case where he or she expects great rates on his or her mortgage. It is also not about your current credit score, it goes an extra mile to explore some more consideration. You would need to know some of the factors the modern industry evaluate in determining whether one qualifies for a mortgage or not as well as what interest one has to pay just in case he or she qualifies. The difference in mortgage in the market can translate to tens of thousands of dollars before one completely settles the loan in question. In all cases, one tends to be evaluated in terms of whether he or she is qualified or not. You would need to read on to know some of the aspects most lenders tend to consider when evaluating their mortgage.
Credit score tends to be one of the factors most of the lenders tend to consider when processing a mortgage. It is essential to note that mortgage is more of a tiered pricing meaning that different rates tend to come as a result of different criteria. Credit scores have traditionally been used to evaluate whether one has the capacity to pay for a mortgage. People with higher credit scores tend to be assured by many mortgage lenders of lower mortgage interest rates. As a result, the lower the credit score you have, the higher the interest rates you will have to pay. Even when one may be below the qualifying credit score, one may qualify in theory where he or she accepts to pay the down payment of an agreed amount by the lender. People with more stable income tend to enjoy lower mortgage interest rates when compared with those with unpredictable income. People with unstable income and self-employed people tend to be subjected to higher mortgage interest rates.
The debt-income ratio is another thing that tends to be used when processing a mortgage loan. The debt income ration tends to come in two ways. Back end ration tend to be one of the debt-income ratios and tends to involve the monthly income debt payment added to the housing payment and then divided by the client’s monthly gross income. On the other end, the front end ration tends to look at the housing cost only less the debts owed by the client in question.
You may also need to know that down payment is yet another factor a mortgage lender would need to consider. You may need to know that lower down payment tend to attract higher mortgage interest rates when compared to a higher down payment. You may also need to note that cash reserves may also be used when determining the interest rates of your mortgage.