Can You Get the Best Mortgage Rate?

Mortgage interest rates are at historic lows. Many people are thinking about buying or refinancing right now. I know I’ve been thinking about refinancing. But will you really get those low advertised rates? That all depends on the formula your mortgage lender is using, and the kind of financial situation you are in. In order to get the best interest rate, you are most likely to need the following:

• Credit score of at least 740
• 20% equity (if you are refinancing)
• Low debt to income ratio
• Conforming loan amount (below $417,000)
• Pay a point or two up front
• Getting out of the HELOC (if you are refinancing)

You can still buy or refinance if you don’t meet the above conditions, but you may not get the interest rate that you would like. Instead, you may find yourself with a higher interest rate. Shop around and talk to mortgage lenders about your options, and what they can offer you. Hint: Try smaller local banks and regional banks first. They are more likely to lend the big guys that have sustained heavier losses due to the financial crisis and mortgage market meltdown.

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