low mortgage rates

How Can You Cash in on Low Mortgage Rates?

With the mortgage rates being so low, more homeowners and homebuyers are looking to save money on new home loans. Current homeowners can save monthly by refinancing at a lower rate. Some borrowers are opting for a shorter mortgage term of 15 years because the monthly payments are more affordable. And not only are people saving money, but lower rates can shave thousands of dollars off the total loan amount over time.

Homebuyers can afford a larger loan because the mortgage rates are low and they, too, are opting for shorter loan terms.

But in spite of low rates, not everyone can take advantage of the opportunities these low mortgage rates provide. Borrowers need to meet today’s tightened credit guidelines to qualify.

To be approved for a low rate, borrowers need to have a high credit score. Typically – scores need to be 740 or higher. Additionally, borrowers need to have a reasonable debt-to-income ratio. The qualifying percentage is usually a max of 45 percent of overall debt to household gross income.

A good credit score can have a big impact on qualifying for the lowest mortgage rates, and therefore on the monthly budget. A recent example on MyFICO.com compared mortgage interest rates and monthly payments on a $300,000 mortgage at different credit scores.

Borrowers with the highest credit scores (760 to 850) could qualify for a mortgage rate of 4.378 percent and a monthly payment of $1,490.  Borrowers with a lower credit score (620 to 639) would qualify for a mortgage rate of 5.917 percent, resulting in a monthly payment nearly $300 per month higher, at $1,783.

Make sure your credit score is as high as possible before applying for a loan to take advantage of low mortgage rates today. At GSF Mortgage we have the tools to check in on your credit score to see if you can qualify for a low rate or to purchase that dream home you have your eye on. Contact us today to see how we can help you!