Erik Larson of Synergy One Lending answers mortgage and rates FAQ.

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The recent rate hikes have people wondering what’s going on with mortgage lending. Today I’m with Erik Larson of Synergy One Lending to share his expert insights. Here are his answers to some of the most asked questions about interest rates and mortgage lending:

1. What is the minimum credit score requirement? Currently, the minimum threshold at Erik’s company for a credit requirement is 620. A lot of the companies in the area and nationwide have a 580 credit score requirement; in general, it’s right around 600 to 620.

2. What’s the difference between being prequalified and preapproved? Erik has been on both sides of this equation. He suggests securing a preapproval instead of just getting prequalified. Prequalification means you had a consultation with a loan officer about your current situation and may have gone over your income; you haven’t really given any documentation or proof that proves these claims.

On the other hand, in a pre-approval, financial information such as two years of tax returns, 30-days’ pay stubs, and two months of bank statements will be gathered and sent to the underwriter for conditional approval or TBD status, which just means that the underwriters looked at it and is ready to go.

“Rates are expected to rise.”

3. Where are we with interest rates today? Since February, interest rates have tripled. Now, we’re around mid-sevens.

4. Are we expecting an interest rate hike? Unfortunately, rates are expected to rise. Jerome Powell hiked the Fed funds rate up another 75 basis points. Erik is hopeful that they will give us some kind of inkling of tapering down; however, it looks like we’ll have more hikes. This is why there’s still a little bit of uncertainty.

The bottom line is if you have plans to buy, now is the right time to do it. Rates may be around 7%, but renting is 100% interest. So give us a call or send an email today. We’d love to hear from you!