The time has come to purchase a home. However, you may not have enough savings to pay off the entire amount so you need to apply for a mortgage loan. You will be paying this loan for years, depending on your chosen term, plus interest. This makes your mortgage rate a big deal. To help you get the best rates out there, we are offering the following tips:
Have a Decent Credit Score
If you have a higher credit score, lenders will assume you are a credit-worthy borrower and that you are less likely to default on your loan. Borrowers with a high credit score who want to borrow a 30 year fixed mortgage rate would pay a total interest of $164, 000. If you have a less-than-perfect credit score, spend no more than 20% to 30% of your credit limit, pay your bills in a timely manner and do not carry a credit card debt.
Put More Money Down
In general, putting down more money means lower mortgage rates. Ensure you can put down at least 20% of the home’s amount.
Choose Shorter Terms
If you think you will only live in the house for a while and sell it in the near future, it makes sense to choose an adjustable-rate mortgage that has a 5-7 year low-interest introductory period. Keep in mind that choosing longer terms means higher mortgage rates for you.
Apply with Multiple Lenders and Compare
If you apply with several lenders, you will be able to compare various rates and fees that lenders charge. Fees and rates vary by lenders. Ensure you get at least three mortgage quotes from various lenders.
A lot of borrowers don’t do this because they don’t want their credit score to decrease. However, FICO permits inquiries with multiple lenders when you shop for a loan. You are then allowed a thirty-day window to have as many lenders pull your credit without having negative impacts on your score.
Mortgage quotes are not standard. Usually, loan officers increase rates and fees to have more commissions. Make use of the quotes by negotiating the best rates. Obtain a quote from a lender to another and ask one to beat the others. You can do this until you can get the best rate that gives you the best savings. Apart from getting a lower rate, you can also negotiate the origination fees and closing costs.
