Can a Great Credit Score Guarantee the Best Mortgage Rates?
An excellent credit score will certainly help you get lower mortgage rates, but it won’t automatically guarantee you anything. In addition to credit, mortgage lenders inspect a few other things before issuing their best loan rates. One thing lenders are paying very special attention to is how much equity you are willing to commit. When buying a new home, the larger the down payment, the better your chances. For refinancing homeowners, better loans are available to those with the most equity. Then there is the all-important debt-to-income ratio. An acceptable ratio means the underwriters believe that your income adequately covers your obligations–both housing and other monthly bills. And finally, your lender prefers borrowers with liquid assets–and no,your baseball card collection doesn’t count. Lenders want “reserves,” which are investments or cash that can be quickly accessed to pay your mortgage in the event of a financial setback. More reserves equals a less risky borrower–and a
