How Can I Qualify for a Good 30 Year Fixed Mortgage Rate?

For most people, buying a home is the single largest purchase they’ll ever make. It’s worth it to get the best 30-year mortgage interest rate you can. Just one more percentage point of interest and you will pay thousands of dollars more for your home over the course of a 30-year mortgage. A 30-year mortgage includes 360 monthly payments. If you can save $200 per month by getting a lower interest rate, this equals $72,000. A quick visit to an investment calendar can show you how much money you’d have if you’d saved $200 a month for 30 years and invested it: at an average 6% rate of return, you’d have an investment fund of over $196,000. So, what can you do to qualify for a good 30-year fixed mortgage rate?

Improve your FICO credit score

Keep your credit score as high as possible. Pay your bills on time and don’t keep more than 20% to 30% balances on your credit cards. Ideally, you should be able to pay your credit cards off every month. Check your credit report regularly. Make sure you have no derogatory reports like collection accounts or liens. Don’t make major credit purchases like a new car or appliances before you pre-qualify for a mortgage. 

Save as much as possible for a down payment

Conventional mortgages often require a 20% down payment. We get it: it’s challenging to save a 20% down payment on a $750,000 home. You can have options for other loan programs like FHA and VA home loans that don’t require such a large down payment.

Have a strong record of earnings and employment

These days, more people are working independently or combine self-employment with traditional salaried jobs. Be sure you can document at least two years or more of steady earnings at the level you need to qualify for the mortgage you want.

Shop multiple lenders

You’ll get different answers from different lenders on interest rates and loan terms. That’s one reason working with an experienced independent mortgage broker who is a loan professional can help you get the best deal on your 30 year fixed mortgage.  That SINGLE INDEPENDENT MORTGAGE BROKER can SHOP dozens or hundreds of with a LENDERS on your behalf with a SINGLE LOAN APPLICATION. And with a SINGLE CREDIT PULL. This is a huge benefit of working with an independent mortgage broker, they only have to run your credit ONCE and can instantly compare rates and shop your loan with dozens if not more lenders finding you the best rates and lowest costs.  Whereas, a consumer went to dozens of lenders to shop the rates, each lender would need a complete application and would have to run the consumers credit in order to accurately quote a rate. Since rates are a factor of much more than just a FICO Score, and the LTV, Loan to Value of a property. Pricing models take into account DTI debt to income, and debt to available credit ratios along with many other factors that can only be accurately priced with a complete application and a tri-merge mortgage credit report.

So that’s why an independent mortgage broker who has your complete loan application and has run your credit can accurately compare and shop rates on your behalf with multiple lenders simultaneously.  Without having each of them re-running your credit. Since through the wholesale channel a broker can just re-issue the same credit report to as many lenders in their channel without any additional hard hit inquiries on the consumers credit.

Now once you have the best mortgage rate and know your loan terms, consider locking in your loan rate while you’re in the closing process. This is a service many lenders offer for free, as well as for a modest one-time cost for those wishing to buy down to an even lower rate.

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What You Need to Know About 30 Year Fixed Mortgage Rates

If you knew the history of 30-year fixed mortgage rates, you might be more motivated to buy a home with a 30-year fixed rate mortgage as soon as possible. You have more good choices in a fixed-rate 30-year mortgage now than ever before. 

Are today's 30-year year fixed rate mortgage rates a good deal?

Does an old-fashioned clock chime 12 at midnight? Back in 1981, 30-year fixed mortgage interest rates were a whopping 18%. That’s right: almost 20% interest on home loans. Home prices were a lot lower in the 1980s, but 18% is still a very high rate.

In 2008 when the mortgage crisis hit so many U.S. homeowners, mortgage rates were about 6.5%. Since the crisis, mortgage interest rates have been falling. They reached their lowest point at an average of about 3.5% in 2016. In 2018, the average fixed rate 30-year mortgage interest was 4.7% according to Bankrate. You can find 30-year mortgage interest rates starting at 3.55% and up. 

What are the advantages of a 30-year fixed rate mortgage?

  • Lower monthly payments: Mortgages are amortized (reduced according to a formula) over 360 monthly payments in a 30-year fixed mortgage. Monthly payments for 30-year mortgages are lower than the payments on shorter loan terms, like 15-year mortgages.
  • Predictable and stable: 30-year fixed rate mortgages don’t change. You can plan your finances more easily with stable 30-year fixed rate mortgages.
  • Afford a better house: With lower monthly payments, you can take out a larger total loan using a 30-year mortgage and buy a better property.
  • Supports savings and investment: If your monthly payments are affordable, you can set aside money for other needs, like investments, retirement, and college costs.

What are the disadvantages of a 30-year fixed rate mortgage?

  • Higher interest rates: Interest rates for 30-year mortgages are usually at least half a point higher sometimes more than 15-year fixed rate mortgages.
  • Buying too much house: You could be tempted to buy a house that’s really more than you can afford with low interest rates and monthly payments spread out over 360 months that give your family little financial breathing room.
  • More total interest paid: You’ll pay significantly more interest over 360 monthly payments in a 30-year mortgage than you with over the 180 monthly payments you’ll make on a 15-year loan.

There’s a lot to consider when buying a home. A 30-year fixed rate mortgage could be the right choice for you, or you may find other mortgage terms such as a 3/1 ARM, a 5/1 ARM, a 7/1 ARM, or even a 10/1 ARM to be the better option.  Or alternatively some of the more financially sophisticated or savvy investor types have been opting for the interest only ARM’s, or fixed interest only mortgage loans; as a way to get in on home ownership and benefit from appreciation gains in equity, and tax benefits of home ownership, all the while making lower monthly payments similar to renting.  But with renting there is no upside of equity gain, which home ownership provides. So there is definitely a lot to consider.

 As an independent mortgage broker we make sure we provide consumers as many options and products available and help them make a decision on their own that is most beneficial for their specific situation. These options aren’t available at the big box retail banks and lenders, who are only able to sell and originate loan products specific to their company.  These options are only available with a wholesale independent mortgage broker since the broker is not limited to only 1 companies products but a great broker is setup to originate with dozens of lenders, and in some cases well over 100+ unique lenders. 
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What’s Written Verification of Employment (WVOE)? Can it Help Us Get the Mortgage and Home We Need?

Applying for a mortgage can be overwhelming with all the requests, forms, and procedures. Add in some terms like WVOE — Written Verification of Employment — and it could be even more confusing. We decided to clear a bit of this information up for you. You don’t always need a WVOE to get a home loan. WVOE is another term for Fannie Mae’s Form 1005, a standard form that has been given out for years to verify employment status and income when qualifying borrowers for mortgages.

Do I Have to Get My Employer to Complete a WVOE to Get a Home Mortgage?

Not always. You’ve got several alternatives to a WVOE. First, if your employer participates in a few of the industry wide e-verification programs for income and employment, they will likely have their HR database linked to one of these programs which allows Mortgage Brokers and Lenders to directly verify your income and employment with your signed consent.

Second, you could get your employment and income verified on the same day online. This is part of Fannie Mae’s Day 1 Certainty program. The Day 1 Certainty program is intended to speed up the mortgage approval and finance process. It offers freedom from paper-based traditional processes, including WVOE (Written Verification of Employment). Your Independent Mortgage Broker can guide you through this process.

What Are My Alternatives to Verify My Income and Qualify for a Mortgage?

You have more alternatives today than ever before to qualify for a mortgage. Understanding your choices is one of the best reasons to work with a qualified, experienced Independent Mortgage Broker, who is a mortgage professional. They can use new tools to get your income verified and qualify you for a mortgage quickly.

A qualified independent mortgage broker can get your income and assets verified on the same day, all online. This means no more copying last 2 months of pay stubs or trying to use your phone to take a picture of paper documents. You won’t have to take forms in to your employer, and won’t have to spend a fortune copying tax returns or bank statements.

If you’ve heard that you need to fill out a WVOE if you get bonuses, earn tips, or have commission income, this is one great reason to work with an independent mortgage broker. While some lenders may still require this document and written verification, an independent mortgage broker who’s up to speed on paper-free documents and verifications can help you with Day 1 Certainty and other ways to cut down on paperwork that’s often redundant to help you get the mortgage you need to buy the home you want.

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