Want to get the Best Mortgage Loan?

We all want mortgage companies to fight for our business and to offer us their very best pricing, programs, and for the lowest costs. However not all borrowers are created equal and the best are definitely given preferential treatment by lenders. How do you get the best mortgage possible, at the best interest rate available, with the lowest fees and points?

Mortgage Loan Basics

Lenders look for the following when determining your viability for a mortgage loan:

Credit is still key when applying for a mortgage loan. Lenders will improve the interest rate offered; give higher loan amounts, approve higher debt-to-income ratios and loan-to-value ratios for borrowers with good credit. Credit scores over 720 are the minimum for preferential treatment.
Having assets is also a plus when looking for a good mortgage loan. Borrowers who can show savings, 401k, and other assets are appealing to lenders as they show the ability to make payments even if there is an income hitch.
Documentable income is also going to help you when looking for a home loan. Good jobs usually translate into a reliable income and mortgage lenders love anything that supports the ability to repay the mortgage. Self-employed borrowers that can't prove their income may be charged a higher interest rate by some lenders, but other positives such as good credit, ample liquid assets (also called reserves), and a good down payment or lots of equity can result in no surcharge to the interest rate.
A down payment of at least 20% or having 20% equity if refinancing will also improve the amount of interest you are offered on your mortgage loan.
Having a low debt-to-income ratio is also a good thing and will help to improve the interest rate you are offered.

When a borrower meets the above qualifications, he or she will be able to pick and choose lenders and loan programs. A good borrower is usually an easy loan for a loan officer and these borrowers are often priced very competitively by lenders who do not want to lose them. This translates into lower interest rates and lower costs (as in points) for the borrower. A borrower more of a challenge will be more limited in qualifying for a mortgage and will often pay more in interest and points. A trusted lender can give you professional advice on your borrowing capabilities and get the best mortgage available on the market.

Sheryl Landrum
Sheryl Landrum is a Loan Officer in San Diego, California and a freelance writer specializing in mortgage issues.