Mortgage rates have dipped below 4% for the first time. Locally, we've seen a steady housing market, and while industry officials say this is a great opportunity to refinance or buy a home, credit counselors say your credit score can go down if you're not careful.Freddie Mac says the average rate on a 30 year fixed mortgage fell from 4.01% to 3.94%. The average rate on a 15 year fixed loan also dipped to a record low.
Wells Fargo Home Mortgage in Anchorage saw applications double to take advantage of the new interest rates.
Jan Jones from Alaska Consumer Credit Counseling said the catch is qualifying for the low rates. Some banks are insisting on higher credit scores.
“All things have tightened a little bit, so what we need to do as consumers is to make sure all of those things are in good condition before we go talk to a lender,” said Jan Jones.
Here are some things you can do to make sure you're prepared before you meet with a lender:
-Make sure your balance on your credit card is less than half of your limit at all times.
-Make sure your payments are on-time every month.
-Steer away from using finance companies because they tend to show up as red flags on credit reports.
-Make sure your debt to income ratio each month is less than 38% of your income.
Also, each time a lender looks up your credit report, your score goes down, so Jones advises that you fix your problem before approaching another lender.
You can also check your credit report without affecting your score by going to www.annualcreditreport.com.