With mortgage rates hovering at record lows, many people have used it as an opportunity to refinance. However, due to restrictive lending standards, it often proves difficult to get approved for a prime interest rate.
To help, John Wasik, a real estate and investment expert, wrote a column for Reuters about the things consumers need to know if they want to secure a low-interest loan.
Wasik writes that one of the most important things to understand is how loan underwriting works. Because banks often sell mortgages to government-sponsored organizations like Freddie Mac and Fannie Mae, tight credit restrictions often apply. Because of this, Wasik advises consumers ask lenders about their "loan level price adjustments" and what specific factors lead to a higher loan rate.
Something else Wasik says consumers should be aware of is the importance of credit scores. When consumers have low FICO scores, they'll likely be approved only for loans carrying higher interest rates.
In addition to paying for bills on time and having limited debt, Wasik says FICO scores can be improved by pulling ones credit report online and having it checked out by a credit repair company. They may be able to spot errors that may be unfairly lowering one's score.