Are you wondering how you can use your great credit to get the lowest rates and fees in your mortgage?
People with great credit can sometimes end up with the same rates and fees as people with lower credit.
Making sure you know how to make the most of your great credit can save you thousands of dollars up front and over the life of your loan. You can easily overspend thousands of dollars on your mortgage closing costs, and pay much more interest over the life of you loan, if you don't get yourself the best deal.
Generally speaking, great credit in the mortgage business is a credit score over 720.
Different Lenders
Some lenders focus on lower credit ("subprime") borrowers, some on higher credit types, and some do all credit types Some lenders will not only give you better rates, but will sometimes add bonuses to lower your rate for a particularly high score.
Some lenders focus exclusively on lower credit. The lender's website may give you a good idea of what they specialize in.
A subprime lender is usually someone you should avoid if you have great credit.
Here are some tips:
• Ask the broker or lender what type of lender they specialize in; check their website for this too
• If you have a lot of equity in your home based on a good idea of the appraised value of the house, make sure this is factored into your loan quotes (at least 20% or more equity in your property may help significantly with your rates)
• If you are working with a broker, you may ask what cities or areas they focus on - if they are in lower income areas more than higher income ones, it may indicate that they have less experience with high credit borrowers
• See if the lender specializes in top credit, which is generally 720 or higher
• If you can fully document your income, assets, and working history, this should also get you a better deal
Loan Documents
If you have great credit, and you can document your income, assets, and job history, you will get the better deals. Not being able to document certain parts of your loan may mean a more expensive loan in many cases.
Sometimes it can be tempting to go for the “no documentation” or “less documentation” loans. It can mean a lot less paperwork, less hassle, and less circulation of your confidential financial records. This is an option on many loans, even for people with high credit. As a general rule, the more you are able to document the better your mortgage rate will be. If you can document your loan, then do so. In some cases it doesn’t matter whether what type of documentation you use, but this is for isolated scenarios, such as when you own more than 50% of your property (the loan is less than 50% of the value of the property).
Ben Afzal is the President of Archer Pacific, a mortgage company. His firm works with homeowners and real estate investors to provide them the mortgage solutions they need. |
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