Finding the Best Mortgage in Boise

 

A mortgage rate is an amount of money added to a loan given to purchase a residential or commercial. This rate can be adjustable, which means it goes up and down, depending on different factors. It can also be a fixed rate. This mean the rate doesn’t change throughout the life of the mortgage.

With a fixed rate mortgage, a buyer must get the best rate possible to keep mortgage payments low. The best mortgage rates Boise ID is usually reserved for those with the best credit score. The best credit scores are 760 points or higher. However, there are other ways to obtain a better mortgage rate.

Look at the Debt-to-Income Ratio

Mortgage lenders look at debts and income together when it comes to giving a low interest rate. Debt-to-income is the amount of debt a person has compared to the amount of money they make. This rate, called DTI, comes in two forms. The back-end debt-to-income ratio is found by:

  1. The monthly minimum debt payments
    2. Adds the proposed new property payment
    3. Divided by the person’s stable monthly gross income.

The front-end ratio focuses on the housing costs and doesn’t fact all other debts. Mortgage lenders look at the front-end ratio higher than 28 percent. They want the back-end ratio of 36 percent or less. Of course, the exact percent depends on the individual lender. It is important to ask the lender about their percentage.

Have Cash Reserves on Hand

The number of months mortgage payments a person has in their bank account is how cash reserves are measured. Mortgage lenders look at money in savings, checking, CDs and money market funds as cash on hand. This doesn’t include retirement plans because the money cannot be obtained without penalties and taxes.

A lender usually wants to see the standard cash reserves requirement of two months of mortgage payments. This means a person must have a liquid cash after closing on the mortgage and getting a good interest rate. One important note is the higher the risk of the mortgage, the higher the cash reserves. It is important to have at least two months of mortgage payments on hand to get a lower interest rate.

Financial Stability is Key for a Lower Interest Rate

Mortgage lenders want property buyers with steady important of least two years. This should be the same job for at least two years. If there was a job change in that two-year period, it must be a higher paying position. Any long periods of unemployment will not get a lower mortgage rate. It may get a mortgage period.

Down Payments are Always a Way to Get a Good Interest Rate

Low interest rates are the key to paying less money for a 15-, 20- or 30-year mortgage. One more way to obtain a lower interest rate is to provide a larger down payment. The general rule is the minimum down payment is 20 percent of the purchase price of the property.