When you are purchasing a house, you are always on the hunt for the lowest mortgage rate. If you are keeping a track of the current mortgage rates, then you might have noticed that the rates never stay the same. So, how do you get the lowest possible mortgage rate? Many people have a misconception that the credit score is the only factor that determines the current mortgage rates in the market. The truth is that there are several other factors that decide the mortgage rate, on the basis of which the lender will give you the loan.
Read on to find out three such major factors that affect the current mortgage rates in the market:
Cash reserves
For those who are unaware of the term, cash reserves represent liquid money saved that is readily available to the individual. Typically, lenders demand that house buyers have a cash reserve that lasts for at least two months. It means that after you seal the deal and buy your new house, you should at least have enough money to pay for the new mortgage payment for at least two months. The mortgage payment includes the principal amount, interest, taxes, and the insurance amount. Cash reserve can include money in your checking account, savings account, and money market funds; however, it does not include a retirement fund because that you can liquidate only after you retire.
Down payment
What many people do not know is that the down payment amount you pay at the time of your house purchase majorly affects your mortgage rate. If you want the best mortgage rate, then try to at least pay a 20% of the total price of the house as the down payment. The mortgage rates are based on the risk factors, so if you pay more the risk reduces, and the lender won’t hesitate to give you a lower mortgage rate.
Employment
It is observed that if you have had a stable job in the past two years at the time you apply for a mortgage, there is a high chance that your lender will be convinced to give you a lower mortgage rate. Along with a stable job, make sure that every time you change your job, you pick a new one that pays you better than the previous one. In this way, your income graph goes up, showing that you are capable of paying off your loan.
Just make sure that you have done a thorough research and have all these factors under control before you go ahead with the best mortgage quote.
There are companies that work on collecting and maintaining credit information of consumers. These are known as credit reporting agencies (CRAs). There are three such major CRAs in the country, namely Equifax, Experian, and TransUnion. Apart from these, there are other smaller-scale agencies too that specialize at the job. If you’re worried about “where to get my credit score?,” the larger CRAs are the most reliable bets.
These major CRAs obtain information from companies that you hold business and transactions with. People or companies that lend you money regularly report to these CRAs on your repaying status. There is also detailed information on the amount you are indebted and whether you have ever defaulted on your payments. Aside from the reports obtained from lenders, these companies also tally your general records based on certain other aspects. Some of these aspects are your public records from the local and state judiciary. These include your tax records and bankruptcy information. This information makes up an important chunk of your credit score and its report.
Equifax
Present in 24 countries, Equifax is an agency that offers consumers protection against identity theft and credit fraudulence. They also sell credit reports and credit monitoring assistance to businesses.
Experian
Experian started off in London and is now a trusted agency in 39 different countries. It provides you with a credit score, credit report, and even credit tracker on subscription. The agency uses FICO 8 system of credit score calculation. Experian was a part of Forbes’ “World’s Most Innovative Companies” in 2018.
TransUnion
Based across 30 countries with a database of over 1 billion consumers, TransUnion is another CRA giant. The agency, like the other ones, will provide you with your credit score and your credit reports. In case you decide to freeze your TransUnion credit report, it will also go the extra mile to notify Equifax and Experian, which frankly is a big help especially in case of identity theft and credit fraud.
So, the next time you are sat wondering “where to get my credit score?,” think of these three giants that provide you with an annual credit score and credit report for free once each year. However, if you are looking for more frequent updates, you can subscribe to their services and receive your monthly updates.
Did you know that you have more than a single credit score? Agencies calculate your credit score based on the data in your credit reports. If you are wondering, “where to get my credit score?,” there are three main credit reporting agencies. These can have different credit scores for you if your information on each of their credit reports is different. Also, these agencies charge a fee to reveal your credit score.
Recently, it has become easier to track and get hold of your credit score without paying any fees. You can get it from your credit card company, your loan provider, and even from a non-profit counselor. Here are a few tips you can use to check your score.