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What's Your Home Worth

Best Mortgage Rates – Not Available for All Buyers

February 23, 2017 By Tom Johnson

Who gets the best rates?

Lenders regularly publish mortgage rates but they may not be available for all buyers. 59607784-250.jpg

Imagine, the mortgage payment based on an advertised rate influenced a buyer to make an offer on a home. After negotiating a contract, this buyer makes a loan application and finds out, that for any number of possible reasons, the best rates isn’t available.

Even if the buyers does financially qualify for a loan at a higher interest rate, it will not be the payment that the buyer expected when the contract was negotiated.

Lenders evaluate several factors such as the borrower’s credit score, debt-to-income and loan-to-value ratios. These variables are used to assess the risk associated with the repayment of the loan.

While mortgage money is a commodity, it isn’t priced the same way items are that involve cash for goods. The lender puts up the money today based on a promise from the borrower to repay over a long term, possibly up to thirty years.

The simple solution to avoid surprises such as the one described here is to get pre-approved at the beginning of the home search process.  This will ensure you know exactly where you stand when its time to start putting in offers on available homes.

I recommend avoiding the pre-qualifications which only completes a small portion of the loan process.  A pre-qualification does not hold as much weight as a pre-approval especially in a competitive market where a seller has many offers to choose from.

Contact me if you’d like a recommendation of a trusted mortgage professional.

Keep up to date on the Denver / Aurora market at  https://www.facebook.com/tomjohnsonrealtor/

 

Filed Under: Mortgage

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