Residential Mortgage Application: Locking a Low APR

When rates drop, residential mortgage applications soar, making low APR lock-in critical. Borrowers should conduct due diligence when researching and completing their mortgage loan application in order to lock in the lowest possible rate.

Several factors determine whether a borrower will be awarded a low rate which includes credit rating, down payment and mortgage product. Proper preparation in advance can further the borrower's chances of nabbing a low APR:

Credit Score

Among the top deciding factors, borrowers should posses a decent credit score (620 or higher) that reflects a sturdy history of making consistent payments and having a solid income. Although the score is based on reputable reporting agency information, all borrowers should scrutinize their credit report to ensure accuracy. Small mistakes or outdated information can make your score tank. Submit corrections, then request an updated copy.

Down Payment

Lenders like to see at least a 20 percent down payment so they have enough collateral in the event of loan default. The more you can front, the better your chances of obtaining the lowest possible rate.

Mortgage Product

Typically a 15 year fixed product offers the lowest APR versus the 30 year. However, not all borrowers can stomach the 15 year's aggressive payment, so don't stress if the 30 year is a better fit.

Also, avoid rate chasing. Rates will rise and fall often making it nearly impossible to predict when rates will bottom out. Your best bet is to apply for a loan when you are financially ready.