Securing the best mortgage rates in Rochester MN is really a matter of four main factors:

Credit Score

If the three most important factors in a home or business is “location, location, location” then we can certainly say the most important factor in the getting the best mortgage rate is “credit score, credit score, credit score”.

If you want to get the lowest rate possible on your mortgage loan, you’ll probably need a FICO credit score of 760 or higher. Some lenders will require a 780 or higher. So it partly depends on the particular company you’re dealing with.

It’s possible to improve your credit score to 760 within a year’s time if you don’t have any serious damage to your credit (i.e., foreclosure, bankruptcy, or a history of missed payments).

A Big Down Payment

A  significant down payment on the home will qualify you for the best mortgage rates available. The days of zero-down home loans are gone and the guidelines by mortgage lenders have changed. Translated into dollars this means the best rates are available only when you make a 20% down payment.

You can qualify for a loan with less money down. FHA loans, for example, only require 3.5% down). But you’ll probably have to put 20% down to get the best rates. Of course, there’s another benefit to this as well. By putting more money down up front, you’ll have more equity in the home from day one.

Buying Points

A mortgage point is one percent of the loan amount. It’s a type of pre-paid interest. It is also referred to as an interest or discount point.   Instead of paying it over the life of the loan, you would pay it up front during the closing process. By paying points at closing, you can often secure a lower rate on the loan.  Some lenders are now only offering the very best rates to customers who pay for points on their loan.

Shop and Compare

Lenders view of borrowers vary so while one may consider you just an average Joe, another might consider you a prime customer.  This will impact the interest rate and terms they offer you.   Even if your qualification criteria are the same from one application to the next, the end results may vary. This is why it pays to shop around.  You should get offers from at least three different lenders, before making any decisions. Be sure to include local banks and credit unions in this process. In some cases, you can get a lower rate from a small bank than a larger / national bank.