Low Credit Score Mortgage Loans - How To Get A Better Loan Rate
Loan rates depend on many factors outside of market rates. Your credit score, the property’s value, and company policies all affect what you will pay for your mortgage. With so many variables, you can get a better loan rate with some careful research.
Revaluate Your Credit Profile
There are many factors that influence your credit score besides payment history. Income, assets, and debt to income ratio are important to lenders. So even with a recent foreclosure, a high level of cash assets could qualify you for a decent rate.
Lending companies don’t automatically use the FICO score to rank your loan application. The financing company may use there own standards or allow loan officers to make decisions. This is where a letter in your credit report explaining extenuating circumstances, such as a job loss or illness, can help. Just be prepared to verify the information if the lender asks.
Take A Close Look At Your Property
Your property’s value can also affect your rates. A property in an area with a proven history of increasing home values is easier to qualify for low rates.
Conventional loans, those sponsored by government entities such as Fannie Mae, have lower rates with their loan caps. Larger loans, also known as jumbo loans, will have higher rates.
Improve Your Down Payment
A large down payment can also improve your rates. 20% is a good starting figure, but more is better. Right after a bankruptcy, you may have to put up as much as 50% to secure a loan.
Select Adjustable Rates
Adjustable rate mortgages also offer low rates, at least initially. Usually you will have one to seven years with a low fixed rate. This low payment will help you to qualify to borrow more.
However, after your initial period, mortgage rates will rise and fall based on a specified market index. Caps will offer you some protection from drastic increases in payments. You may also have the option to refinance to lock in low rates.
Take the time to read about rates and terms. Ask for lots of quotes and play with changes in terms to improve your rates.
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Low Interest Rate Auto Loan - Increase Chances Of Getting Approved For A Low Rate
Getting approved for an auto loan is easy. However, obtaining a low rate auto loan may be a bit more challenging. When financing any sort of merchandise, the interest rate received makes a huge difference.
If you have bad credit, a lender will likely charge a higher rate. In some instances, this may significantly increase the monthly mortgage payments. If shopping for a new or used vehicle, adhering to the following tips will increase your odds of snagging a low rate auto loan.
When is the Best Time to Apply for an Auto Loan?
If financing an auto loan, timing is a crucial factor. For the most part, lenders prefer applicants that display stability. Thus, steady employment is a must. When applying for an auto loan, wait until you have been with your current employer for at least six months. If you have a habit of switching employers every two to three months, an auto loan lender may consider you a risky applicant, and increase the auto loan rate.
Establish Credit History
Before financing a home or auto loan, establishing previous credit history will work to your advantage. Auto loan lenders are more apt to offer lower rates if you have maintained a good relationship with a previous creditor.
Building a good credit history is easy. You may do so by applying for a major credit card, gas card, or retail credit card. Upon receiving the card, make a few purchases, and pay the balance each month. This will reflect positive on your credit report, and quickly boost credit score.
Keep a Low Credit Card Balance
When judging an applicants credit history, lenders will also assess whether a loan applicant can afford a particular vehicle. If you have acquired a lot of debts, this may prevent you from obtaining your dream car. Therefore, attempt to reduce debts before applying for a car loan. Fewer debts will increase your spending power, and make you eligible for prime rates.
Wait at Least Two Years after Filing Bankruptcy
If you have filed a recent or past bankruptcy, try and wait at least two years before applying for an auto loan. After a bankruptcy, lenders consider you a big credit risk. You may get approve for financing; however, the interest rate may climb as high as 18 percent.
Instead, focus on rebuilding your credit history. Immediately following a bankruptcy, apply for a bad credit credit card. If possible, attempt to open at least three new lines of credit. By doing so, you will re-establish a good credit history and improve credit score. After 24 months, you will likely qualify for a reasonable auto loan rate.
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