Refinance mortgage rates in Colorado change often – sometimes even multiple times a day. You see an advertised rate on a lender’s website and assume you can get that rate, but when you see your paperwork, the rate is different.
What happened and how do you get the advertised rate?
What Lenders Look for from Applicants
Lenders look at a few things when you apply for a mortgage. Of course, they first look to see if you meet the requirements for the intended loan program. But beyond qualifying, they look at your factors to determine what mortgage rate they’ll give you.
Will you always get the advertised rate?
Probably not. Here’s why.
Each applicant has different qualifying factors. Unless you have the highest credit score and lowest debt-to-income ratio, chances are you’ll get a variation of the interest rates you see advertised.
This isn’t a bad thing, but you can focus on what lenders want to see so you get the best rates available to you.
Each loan program has minimum credit score requirements, but that doesn’t mean you should stop there. The higher your credit score is, the lower the risk of default you pose. This usually means you can secure lower refinance mortgage rates in Colorado.
Your debt-to-income ratio shows lenders how much of your gross monthly income (income before taxes) is committed already. With your new mortgage, your DTI should be 43% or less. The lower it is, though, the lower your risk of default is and the more likely a lender is to give you a lower interest rate.
If you can, pay off your debts or at least pay them down so your DTI is as low as possible.
Stability of your Income and Employment
The more stable your income and employment is, the more likely you are to be a good borrower. Lenders like at least a 2-year stable employment history, but any stability will work in your favor.
If you have variable income or change jobs often, you may not have access to the best refinance mortgage rates in Chicago, but it depends on your other factors.
Looking at the Big Picture
Lenders look at the big picture to determine your ability to afford the loan. A high credit score or low DTI may give you access to low rates, but so can the big picture if you prove you are good, aka a low-risk borrower.
Lenders base your interest rate on your likelihood of default. The fewer signs you have of being a ‘risky’ borrower, the more likely it is you’ll get a great interest rate.
If you need help figuring out how to get the best refinance mortgage rates in Colorado, let me help. I’ll look at your situation and tell you where you stand. I can provide pointers on what you should improve to get even lower interest rates or help you find the best rate available to you given your current circumstances.