Finding the Best Interest Rate for Your Mortgage
When searching for a mortgage broker or loan officer, it is best to do some research before settling on one. Finding the best interest rate for your mortgage is of the utmost importance.
Look for fixed rate mortgages, and try to find the lowest interest rate your credit history will allow. Get a copy of your credit report and score prior to finding a mortgage lender. Look at the credit score for yourself. If your credit score is above 700, you have excellent credit and should be able to lock in the very best interest rates available. If your credit score is from 650 to 700, your credit is decent. You should be able to get interest rates that will be somewhat higher than the first group, and this could mean a significant difference in the amount of the monthly payment. If your credit score is below 600, it is best that you work on your credit score prior to looking for a mortgage, as you will have the very highest of interest rates, if you get approved at all.
Determining Factors
When you apply for a mortgage, lenders look at your credit history, credit score, work history, your ratio of income versus expenditures and the value of the home you are buying. If your credit has suffered because of an event such as a divorce, layoff or medical problem, you may have what is called situational bad credit and many lenders may still work with you to get a good interest rate for your mortgage.
Finding the best interest rate for your mortgage also will depend on the lender you choose. Contact lenders you are interested in and find out what their interest rates are for your credit score. They can give you this information over the phone, so there is no need to make in-person appointments for each one. Simply call the lenders you are interested in, write down the differences and set up an interview process after you decide which ones might be the best for you.
Bad Credit Options
There are lenders that specialize in bad credit or less than perfect credit in Canada. These companies are willing to give high-risk applicants a chance, as long as the home they are buying is worth more than the mortgage being taken out. This means some sort of downpayment may be required. Also, many lenders will not loan to a consumer unless their income meets minimum income requirements.
If you do opt for a bad credit mortgage with a higher interest rate, you should think about improving your credit score and refinancing down to a better rate within a couple of years. But make sure your mortgage does not contain prohibitive prepayment penalties that would prevent you from refinancing when you want. To find out more about the specific lenders you are interested in doing business with, it is best to contact them directly about the interest rates they offer, their requirements for mortgages and loans as well as their pre-approval procedures.
