I Want the Best Rate
“I want the best rate!” Sure I hear that all the time. This is likely the second most asked question after “how much do I qualify for “. The best rate request is most always answered by, “Sure we can give you the best rate, just give me the best credit score, best property, high loan amount, great debt to income ratio and best loan to value and your request will be granted”.
It’s a very common thing for people to focus on the rate, yet I wonder and ask myself why didn’t they focus on paying down their current debt or saving more money for this new home purchase a year prior to.
People come from all parts of the country with a different set of values and habits. Some have no or very little debt while not having an extra nickel in their pocket. While others have a pile of money in their bank accounts but have a huge debt load, multiple large car payments and over a dozen loaded credit cards.
While the first type of people may have excellent credit, they do not have the funds to cover a good down payment nor closing cost. The second type of person in our example above may have the ability for a large down payment yet their debt to income ratios are so high they don’t qualify for a pop-tent.
The point is the person(s) with the best credit score the lowest or no debt and the greater amount of savings is the person who is going to get the best rates. Best rates do not go to the person who thinks they are the best negotiator. The system in most cases is designed to reward those that have been financially more responsible over the past ten years.
Remember, being financially responsible also includes how you pay your income taxes. The government views this as, if you write off all your income for tax purposes you are also stating you have to have income for qualifying for a mortgage loan. You cannot stiff Uncle Sam’s left hand while trying to maximize from his right hand, the GSE’s. (Fannie, Freddie, etc.)
Remember for most people a home purchase may be the largest debt they take on in their life time. Preparing in advance could save you thousands of dollars in interest payments over the life of the loan. Getting properly prepared takes time. Ask questions. Do your homework and we will see you at a happy closing table with the best rate you qualify for.