10 Surprising Facts About Home Loans
When looking to get a home loan in Boca Raton, it always helps to know what you are looking for and some of the lingo. Additionally, it never hurts to know a few fun facts about home loans and different kinds of mortgages throughout time.
1.) The lowest home loan interest rate
Though our current interest rates are still historically low, the lowest interest rates ever issued were in 2012. These interest rates ranged from 3.5% to just below 3% depending on your loan variation.
2.) The highest home loan interest rate
If we look back over time, we find that in 1981, some of the average interest rates were almost as high as 18.5%. This means mortgages were costing a lot more over the life of their loans than they cost the normal buyer now.
3.) Collections accounts do not always translate to not getting a home loan.
Most underwriters generally will not care too much if the accounts you have in collections are medical debts. Some lenders may even overlook a few obligations on your credit check that are not medical if your credit score is high enough. You would think that having any accounts in collections would prove to a lender that as a buyer you might not be reliable; however, in some cases, lenders will approve the loan regardless of that activity if you have a higher credit score.
4.) Paying extra on your mortgage can reduce the length of your loan.
If you pay extra money toward your house bill each month, you could end up paying your mortgage off years in advance which could ultimately save you thousands of dollars on interest in the long run.
5.) You can have your home loan payments automated.
Most lenders offer a way to have money automatically transferred from your bank account directly to your lender. This technology makes it easier to ensure payments are made on time and that a late or missed payment never damages your credit score.
6.) Some home loan options require little or no down payment.
If you research what types of loans you qualify for, you may find that you can get a home loan with as little as a 3% down payment through HUD or even sometimes $0 down through a VA program.
7.) Your credit score is essential.
Having a higher credit score ultimately saves you a ton of money over the life of a home loan. Your lender will reward your higher credit score by giving you a lower interest rate. A lower interest rate can save you over $10,000 compared to a higher interest rate offered to someone with a poor credit score on the same 30-year loan.
8.) In some cases, student loans will not affect your debt to income ratio.
If your student loans are in deferment, underwriters can exclude them from the calculations made to figure out your debt to income ratio. It is assumed that if your student loans are still in deferment, you have just recently graduated from college and you will soon get a great job that will have a higher income.
9.) Having assets does not mean what it used to.
Despite having large sums of money in the bank or in assets that could be liquidated, if you don’t have adequate income, lenders may not give you the opportunity to borrow from them. They want you to show that you will be continuing to gain money and assets to pay your current financial obligations as well as any others you may accrue while you are paying them.
10.) Being self-employed can make it hard to qualify for a home loan.
Sometimes, self-employed borrowers find it difficult to get a mortgage because they write off so much of their income making it appear that they have very little spending money. If you are a business owner, keep in mind that the amount you are showing the IRS as income may help you pay smaller amounts in taxes; however, it also looks like you are making less money to lenders as well.
NHL Lending and Your Home Loan
Contact us here at Kloze to discuss what opportunities we have for you to get a home loan today. Our team can help answer any questions you may have about the application process, the mortgage programs we offer, and what qualifications you will need to meet to be able to get a loan through us. We try to make the entire home loan process as easy as possible so that you have minimal hassle standing between you and your dream of home ownership.