It takes more than just comparison shopping when it comes to mortgage interest rates in modern times. It is also not about your current credit score, it goes an extra mile to explore some more consideration. One would need to know all the factors modern mortgage lenders tend to consider when determining mortgage interest rates. The difference in mortgage in the market can translate to tens of thousands of dollars before one completely settles the loan in question. In all cases, one tends to be evaluated in terms of whether he or she is qualified or not. It is essential to know some of the critical aspects mortgage lenders consider in coming up with mortgage interest rates.
Among the major aspects most lenders tend to consider is the credit score. Bearing in mind that there are different criteria used in arriving at mortgage interest rates, one would need to know them and how they affect him or her. Credit scores have traditionally been used to evaluate whether one has the capacity to pay for a mortgage. Most lenders tend to lower the mortgage rates for people with higher credit scores. That tells you that as credit scores go lower, the mortgage rates tend to go higher. Where one has enough time, he or she would need to begin by working on his or her credit score. People with more stable income tend to enjoy lower mortgage interest rates when compared with those with unpredictable income. In most cases, self-employment income tend to be perceived by many lenders as high risk and hence mortgage lenders tend to be very strict.
The debt-income ratio is another thing that tends to be used when processing a mortgage loan. One may need to know that there are two categories of the debt-income ratio. One of the ways is the back end ration which looks at the monthly minimum debt payment and the housing payment which is then divided by the monthly gross income. The front end ratio is the second type of debt income ratio which is calculated by subtracting the debts the clients owe from the housing cost.
Down payment is also another factor most mortgage lenders tend to consider. You may need to know that lower down payment tend to attract higher mortgage interest rates when compared to a higher down payment. You may also need to note that cash reserves may also be used when determining the interest rates of your mortgage.