3 Tips for Getting a St. Louis Mortgage
Getting a St. Louis mortgage loan approved is the most important step in buying a house. Without a loan, you won’t be able to move forward, or you might not have enough to buy the St. Louis home you want. Mortgages are all about interest rates, and the better interest rate you have, the less money you’ll have to spend on your loan.
If you’re looking to get a good St. Louis mortgage, here are three tips for getting for getting started.
Keep your credit score up
Whether you’re getting an investment loan or buying your primary St. Louis home, your credit score means a lot to your lenders. Essentially, it tells them how likely it is that you’ll pay back your loan on time. When you have a higher credit score, then lenders will consider you a safe risk and give you a lower interest rate.
To get a good loan, you need a score of about 720 or better to get the best interest rates on a loan. If your score is looking a little low, hold off on the mortgage and improve your score first. If you aren’t making payments on time, make sure you start. Don’t open new credit cards, and pay off as much of your monthly balance as possible. Monitor your credit score and see that it rises accordingly.
Have a high down payment ready to go
A cash offer is one of the easiest ways to persuade lenders, but if you can’t pay completely in cash (and few can), then you should have a strong down payment in cash ready to go. This will lower the amount of money that the lender needs to loan to you, and it looks better to the lender.
For most investment loans, you need anywhere from 20 to 30 percent of the total price for your down payment. If you have a lower credit score, offering more money on the down payment can help you get approved for a loan you would otherwise be turned down for,
For primary resident loans, you can get a loan with only 3 percent of the price for a down payment for certain types of loans. If possible, you should still aim to put at least 20 percent down for your down payment. Lenders will be more likely to give you a better interest rate, and your won’t have to pay mortgage insurance on top of all the other taxes and fees.
Keep a low debt to income ratio
Having a good income is important to getting a loan, but it isn’t enough just to have a good income stream coming in each month. It also matters what is going out, meaning where are you paying off debts. You may be paying off a credit card debt or student loans. These things can bring down your debt to income ratio,.
For investors, this number needs to be about 40 percent. Keep in mind, your lender will only use about 75 percent of what you expect to bring in from rent. That’s because rent prices may go down over the lifetime of your loan, and there may be months when your property sits empty. Your lender wants to make sure you can still make your payments.