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Personal Finance Tips

How to get the best Mortgage Loan rates?

The most important thing if you want to get the best mortgage loan rates is to make sure that you have a good credit rating. The amount of interest that you pay is going to be based largely on your credit score. The reason for this is quite simple people with good credit have proven that they are likely to pay their bills and that means they are less of a risk than people with bad credit. That means the bank can give them a lower rate. Even if you have credit that isn't very good there are things that you can do to help improve your credit score in a fairly short time before you apply for a mortgage.

The biggest factor in determining your credit score is whether or not you pay your bills on time. While all unpaid bills will hurt your credit the further in the past they are the less they will hurt. In order to make sure that you get the best possible mortgage rate you are going to want to make sure that for at least the six months before you apply that you have paid all of your bills on time. As the most recent bills these are the ones that will have the biggest impact on your credit score. The longer you can go with no unpaid bills before you apply for a mortgage the better, not only will it help you to get a better rate but if you have too many recent unpaid bills you may not qualify for a mortgage at all.

It is also a good idea to try to pay down your credit cards before you apply for a mortgage. One of the major factors in determining your credit score is how much of your available credit you are using. This is simply the ratio of how much credit card debt you have compared to your credit limit. If this is over fifty percent there will be a major negative on your credit and that will mean that you pay more for your mortgage. If it is at all possible try to pay your credit cards down to the point where the debt is less than half your credit limit before you apply for a credit card.

It is also a good idea to make sure that you don't apply for any new credit in the six months before you apply for your mortgage. One of the factors that goes into determining your credit score is how much credit you actually have. This is usually determined by how much credit you apply for, so every time you fill out an application for a new credit card or any other type of loan you are actually hurting your credit rating. Most people will apply for these things without even thinking about the impact that it will have on their credit. This is something that you have to avoid if you want to get the best mortgage rates.