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HOME EQUITY RATES
Several factors influence where mortgage rates trend over time, including the U.S. Federal Reserve’s asset purchases, housing demand and the secondary market for mortgage-backed securities. But the largest driver of getting the best mortgage rate is still in your control.
How do you qualify for the lowest mortgage interest rate? Lenders decide if you’re a good risk for their money. The lower the risk, the better the rate. They’ll study your income, credit score, employment history, liquid assets, down payment, the type of property you’re buying, and its value.
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Know Your Credit score
Your credit score is the foundation for your personal financial profile. The most commonly used score is issued by Fair Isaac Corp. (FICO), and grades you in five different areas, each making up a percentage of your grade. Credit scores range from 300 to 900; FICO’s are between 400 and 800. The best mortgage rates today go to borrowers in the high 700s and above. The best candidates have low credit card and loan balances, and long histories of on-time payments and ongoing credit accounts, so make sure your credit report is error-free.
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Get Out Of Debt
Too much debt makes you a bad risk. Lenders look at your debt-to-income ratio (DTI), which should be less than 43%, to determine if you’ll qualify for the best current interest rate. Lower your DTI by paying down your plastic. This will most likely raise your FICO score, as well.
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Think about Mortgage Rate Locks and Points
After years of low numbers, current interest rates are expected to climb as the Federal Reserve slows down the pace of the economic stimulus. A rate lock makes the mortgage lender commit to holding an interest rate for you for a specified period of time. This guarantees you will get the rate you saw at application time, even though your loan hasn’t closed.
Choose a Mortgage
Your choice of mortgage will be dictated by your goals and your resources. It’s important to compare different types of home loans. Your choices — government or private, fixed or adjustable, 15- or 30-year term — depend on your goals and the strengths and weaknesses of your application.
Home buyers who don’t have a lot of cash should first look for a government-backed mortgage that allows a small down payment, or a community mortgage from Fannie Mae or Freddie Mac. Examples include the FHA loan, insured by the Federal Housing Administration, VA loan, guaranteed by the U.S. Department of Veterans Affairs, and USDA loan, backed by the U.S. Department of Agriculture, My Community Mortgage, from Fannie Mae, and Home Possible from Freddie Mac.
The FHA loan allows a down payment as low as 3.5 percent of the home’s purchase price. The VA loan and USDA loan can be used to buy a home with no down payment at all. Community home loans require three percent down and have lower mortgage insurance premiums, but they are restricted to people whose income falls in the low-to-moderate range.
Buyers who have a bit more cash should consider a conforming loan from Fannie Mae or Freddie Mac. Fannie and Freddie are corporations that have been controlled by the federal government since falling into financial trouble a few years ago. They purchase loans that conform to their guidelines (hence the term “conforming loans”) from lenders. These loans are available with a down payment as small as five percent (three percent for community mortgages) of the home’s purchase price.
There are size limits to the above-mentioned loans, and other government-created guidelines that borrowers must meet. Those who want to purchase more expensive properties or choose loans with non-standard features can select jumbo or non-conforming loans. These are sold by private lenders that create their own guidelines.
Top 10 of the Most Reviewed Mortgage Companies are:
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Company |
Description |
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Nationstar Mortgage |
Headquartered in Dallas, TX, Nationstar Mortgage is a lending company founded in 1994. Nationstar currently serves more than 2 million customers, and they service more than $375 billion in loans |
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Amerisave Mortgage |
Amerisave Mortgage is one of the United States’ largest online mortgage lenders. The mortgage broker, headquartered in Atlanta, GA, was first founded in 2001. |
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Caliber Home Loans |
Caliber Home Loans, Inc., originates mortgage loans through various channels and transaction types, and since its inception, grown its mortgage production volume while growing its servicing portfolio to over $75 billion. |
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Lending Tree |
LendingTree offers a wide range of loan services, including auto loans and mortgages. The company was founded by Doug Lebda in 1998, and it is headquartered in Charlotte, NC. |
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Prospect Mortgage |
Prospect Mortgage is a mortgage lending company that is backed by private equity firm Sterling Partners. The company, which is headquartered in Sherman Oaks, CA, offers a range of home loan solutions. |
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Jersey Mortgage Co. |
Jersey Mortgage Co. is a mortgage company founded in 1938. It offers loans and mortgage refinancing in New Jersey, Pennsylvania, New York, Florida and Connecticut. |
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Bank of America Mortgages |
Part of one of America’s largest financial institutions, Bank of America Mortgages offers home buyers mortgage services and products. The company is headquartered in Charlotte, NC, and it was founded in 1930. |
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Quicken Loans |
Quicken Loans is a lending company that has funded more than 2 million home loans. Founded in 1985 in Detroit, MI, the company is now the second largest mortgage lender in the United States. |
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Greentree Finance |
Green Tree services different types of loans including mortgages, refinancing, reverse mortgages, and home equity. They are a member of the Walter Investment Management group. |
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Chase Mortgage |
Chase Mortgage is a division of one of America’s largest banking institutions, Chase. The company offers a range of mortgages, home loans, and associated home loan products. |
