3 Easy steps to obtain the best mortgage rates in Houston, TX
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Are you planning to buy your dream home in Houston this Christmas? If so, you must be looking for the best mortgage rates in Houston, TX. In this article, we have drafted a few easy steps following which you can easily obtain the lowest possible mortgage rate for your home loan. Take a not of them so that you can quality for a home loan and get your new home this festive season.
- Improve your credit score: The credit score matters a lot while you pursue a home loan. If you have a high credit score, lenders are more likely to offer the lowest mortgage rates. But if you have a bad credit score, you have to struggle to get the best mortgage rate for your home loan. Lenders consider 740 to be an ideal credit score. However, you can even qualify for home loans with a credit score of 650. It depends upon the loan type and loan term you choose. The best way to improve your credit score is by paying all your bills on time. Check your credit score report and improve it before applying for a mortgage.
- Save dollars for a down payment: Lenders often look for borrowers with a high credit score. But if they fail to meet the requirements, they demand a high percentage of down payment. Usually, you may have to pay 3-5% of the loan amount to qualify for a home loan. For example, an FHA loan requires a 3.5% down payment. But, in case, you have a bad credit score, you need to pay more to get loan approval. So, if you plan to buy a house at the best mortgage rate, you must ensure having a sufficient bank balance.
- Work on your debt-to-income ratio: Debt-to-income ratio defines the amount of money you can make to clear all your debts. The higher the DTI ratio, the lower the chance of obtaining the best mortgage rates in Houston, TX. In other words, lenders seem more attracted to borrowers with low DTI ratios. They believe borrowers with low DTI can afford a new loan payment without creating a risky situation. To be specific, borrowers with a DTI ratio below 36% are considered less risky than those with a higher DTI ratio. Therefore, if you want to get a home loan at a low mortgage rate, you must start working on your DTI ratio from today onwards.
Indeed, getting the best possible mortgage rates in a city like Houston is pretty challenging. But if you start paying attention to the steps mentioned above, you can win half of the race. Once you meet all requirements, make sure you lock in your rate. You can ask your lender to lock in your rate once you complete signing all your final documents. Otherwise, mortgage rates may fluctuate, and you may have to deal with high mortgage rates for your home loan.