Interested in buying a Boston Beacon Hill condo? You better start saving for that down payment. In the Boston condo market, you will be competing with cash buyers. In addition to saving, you’ll want to prove yourself a highly qualified buyer so that you can get the best mortgage rate possible. This is extremely important because the terms of your mortgage can make a big difference in how much you pay to borrow the same amount of money. For example, one-quarter of a point could mean an extra $25,000 paid in interest over the life of a loan for a$565,000 Boston Beacon Hill condo. Do you really want to pay an extra $25K? Didn’t think so. Here are four easy tips on how to position yourself to get the best possible mortgage rate possible

Improve Your Creditworthiness

According to Bankrate, the best mortgage rates are available to borrowers who have credit scores of 760 or above. Nowhere near that number? Don’t panic. You can improve your credit score by paying down or paying off loans, paying past-due collection accounts, and cleaning up any errors you discover on your credit report as they can — and do — occur.  In fact, 25 percent of credit reports contain errors that are serious enough to result in being denied credit altogether. You can see where you stand by getting a free copy of your credit report.

Lower Your Debt

Paying your bills on time and paying down your credit card balance can reduce your debt-to-income ratio, or DTI, which improves your chances of qualifying for a low mortgage rate. Make sure your debt-to-income ratio, which compares the amount of money that you earn with the amount of money that you owe creditors, is no more than 36 percent. Anything below 36 percent is considered “good.”  If you’re in the 37- to 43 percent range, many lenders will still give you a loan, but if you’re above 43 percent, it may be time to reevaluate how you’re spending your money.

Find Steady Employment

Mortgage lenders prefer candidates who can prove steady employment for several years.  Ideally, you have been on the same job for at least two years or have made a job changed and moved into an even higher paying position.  If your income is spotty (For example, if you’ve got long periods of unemployment or up against a pattern of declining income) that’s going to be problematic. And if you’re self-employed, you should know that there are many hoops to jump through.

Have Ample Cash Reserves on Hand

How much liquid cash will you have after closing to cover your new mortgage payment? The standard requirement for cash reserves on a mortgage is two months.  This money should be saved in savings or checking accounts, certificates of deposits or money market funds.

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