What You Have to Do to Get a Low Interest Home Loan
By admin at 15 November, 2009, 6:56 pm
From what you hear in the news, you’d think this would be the perfect time to go receive a home loan, with interest rates at their lowest level in 20 years. In fact, the typical interest rate on a 30 year mortgage is now less than 5%. A homeowner currently paying a mortgage at 7% or higher stands to save hundreds of dollars every month on his mortgage payment. So you should run on down to your bank and sign up for a loan today, right? Well…it’s not that simple.
As bank losses from bad loans have mounted, they have become much more strict about to whom they grant credit. Whereas in the previous few years, banks would basically lend funds to somebody, now they need to lend to no two. So despite fabulous interest rates and a government push to get funds circulating, banks are reluctant to make a loan to somebody.
So how can you actually borrow funds for a home loan in these conditions? The first key is your credit rating. All over the country, credit ratings are getting ruined as people lose their jobs and their homes. If you need to borrow to take advantage of the fantastic rates being offered today, it helps tremendously if you are able to keep making existing loan payments on-time. Do everything you can to improve your credit rating.
Veterans of the American military will have an easier time getting a low interest home loan. The Veterans Administration loan program attaches a government guarantee to a loan written to a veteran by a bank. Another advantage of this kind of loan to a veteran is that, since it is guaranteed, mortgage insurance is not necessary.
You are probably also going to need some funds for a decent down payment. Gone are the days when you could buy a house with nothing down because the bank expected the value of your home to keep going up forever. If you need the low mortgage rate, you need to have funds in hand. An alternative is if you have an existing loan through a government agency, which may qualify you for a new government-backed loan.
Is it possible then to get two of these low interest home loans? Sure! But you have got some work to do. Do everything you can to tidy up your credit, save up some funds, and avoid borrowing in excess. If you also happen to be a veteran or currently in the military, that also gives you a sizable advantage.
If you are looking for the lowest possible interest rate, you should also avoid a loan of over $417 thousand, which would probably be considered a jumbo loan. Jumbo loans always have a higher interest rate, but recently that extra rate has gone up.
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