Can someone even get a mortgage today?

Well, if you were to speak to the First Meridian closing department in Brooklyn, it seems that many peoples actually can get approved and are actually closing mortgage loans today!

So assuming that one can qualify for a mortgage loan, the #1 question that I am asked all the time is, what is my rate? And when should I lock in my rate and how do I know that this rate is the best possible rate?

In order for me to properly answer I have to ask questions. The rate is determined by the following 5 factors.

A. Percentage down payment or “loan to value”
B. Credit score.
C. Type of loan; Conventional, FHA or No income Verification.
D. Loan Term, 15 or 30 year and
E. Type of property- house, condo or coop.

All of these factors determine what your rate will be.

A client called me a few months ago and asked me what his rate would be. I answered him by asking more questions. He said, my credit is excellent, my income is stable and I already have a pre approval from another mortgage consultant (what is a pre-approval or a pre-qual? A discussion for a later article!). I said okay and I was about to give him the current rate when he mentioned that he owns a rental property in Lakewood NJ. I asked him, does the property show a loss? He said he thinks his accountant does a good job. I said to him, I can give you a rate but until I see your tax returns and your credit etc.. I could not write a pre-approval letter. To make a long story short, his income was fine albeit the rental losses. The problem was his credit score was 642!!
He was eligible for rates that were ½ % higher because of the credit score. The lower the score, the higher the risk to the lender so, the higher the rate. If your score is low you may not be able to put less than 20% down, you may not be able to get a mortgage at all!

Needless to say, we closed the loan, her score improved and she got a great rate!

Getting a mortgage in November 2010 is different than in the prior years. Sometimes when refinancing, the best deal out there is with the current servicer of your current mortgage. Sometimes the best deal out there is not the one that boasts the lowest rate, but the one that actually ends up at the closing table.