When you start looking for a house, it’s the first thing most people do: rate shopping. Mortgage rates do vary, and that’s a fact – but the thing is, most people are confused on what they really depend on. If you’re thinking you need to go rate shopping to get the best deal, let us give you a quick lay of the land. It’s not quite what most people think.
HOW MORTGAGE RATES WORK:
Rates aren’t actually determined as much by the lender as they are by the borrower. It’s a common misconception. But the rates you can be offered depend on your income and credit. Lenders use what is known as your DTI – your debt-to-income ratio. This is basically your monthly debt stacked against your monthly income. Lenders use this to evaluate what kind of a monthly payment you could handle.
So… what do we do now?
If you’re feeling slightly crestfallen that you can’t just go rate shopping for the best deal (I feel you, great bargain shoppers!) – fear not! What’s really cool about this is that YOU have all the power to control your rate. The best thing you can do to get better mortgage rates is to improve your credit, which will impact your DTI. You can also be saving for a down payment – the more you can put down on a house, the better your rate will be. We list some of our best and easiest tips to improve your credit here.
And our lending team can help. Here’s where we have an edge – Most lenders have a threshold of 40% DTI. But because of our unique direct lender set-up, our parent company will allow us to go up to 50 or 55% DTI, depending on the situation. We really try to work with you. We’re a family-based Christian lender, so we are flexible and up-front, and you’ll get to know our team. So if you’ve heard no before, don’t give up. Give us a call.
The Christian Mortgage Mom