Many borrowers are finding that the record-low mortgage rates advertised recently are out of reach. So how can borrowers snag these best rates â€” which for the 30-year fixed-rate mortgage alone has been under 4 percent recently? Basically, they need to prove to lenders they are less risk: Lenders offer the best rates to those who they perceive as low-risk borrowers.Â
Here are ways for consumers to show lenders that they are low-risk borrowers, according to a recent article at The New York Times:Â
Credit score: According to one mortgage broker, ideal borrowers nowadays have a FICO score of 740 or higher to qualify for the best pricing.Â
Property types: Buyers of a duplex, four-unit building, or condo may have a rate premium added. Also, lenders will charge borrowers more if they plan to rent out the property rather than live there.Â
Down payment: Borrowers who put down at least 25 percent will most likely attract the best pricing, lenders say. â€œLenders offer different breaks on rates if equity is higher, so you should ask what is available,â€ The New York Times article notes.
Also, borrowers who are able to get a low rate now may want to lock it in if they are heading to closing soon. â€œLenders typically agree not to change an offered interest rate for 60 days, but borrowers confident of a quick closing may be willing to accept a 45-day rate guarantee, or even a 30-day lock, in exchange for a small discount, because the transactionâ€™s speed helps the lender reduce its risk,â€ The New York Times article notes.