My Financial Healthcheck

With all the new rules and procedures that seem to change weekly, the keys to get the lowest rate on a mortgage fall into a few simple categories.  Credit score, the higher, the better, a score over 741 and you are golden.  If you know you credit score upfront it makes you a better shopper, subscribe to one of the many sites where you can monitor your scores. If you know you want to do a refinance or buy a home make sure you prepare in advance, and if you have the means, pay down your revolving balance on any credit card to less than 50% of total line, this could increase your scores by as much as 50 points which could make a huge difference in getting the lowest rate.

Know your house value, sites to check are zillow or other sites that will give you a range what your home may be worth, or talk to a realtor and ask for a home valuation. The lower the LTV (Loan to Value) of your home the better chance of getting a lower rate.

Figure out you debt ratios, whatever you monthly gross income is for salaried borrowers, or whatever the net (Gross minus expenses) is for self-employed borrowers gets divided by your minimum monthly mortgage payment (Including real estate taxes and homeowners insurance), car loans, revolving debt etc and if that  # is less than 42% then you generally would qualify for most loans products.

Know what you assets are, this includes checking and savings accounts, any stocks or bonds and retirement accounts like IRA’s or 401K’s. Most programs want some reserves which are considered having savings left over after buying or refinances a home.

Plan on if you have the ability, to pay a point on any mortgage. A point represents a percentage of the loan amount, i.e.. 1 point on a $100,000 mortgage is $1,000, it should enable you to get a lower rate and if you plan on staying in a home at least 10 years it will more than pay for itself vs. a zero point deal.