Buying a home is a huge financial decision. And because it is a big commitment, home ownership isn’t something that should be rushed. If you are planning to buy your own house, shop for the lowest mortgage rates. This will help you make the most of your investment. Investing in a home soon? Here are some tips you could use to get the best mortgage rates possible.
Work on your credit score
Your credit score determines whether you can qualify for a loan or not. As well as the rate you’ll have to pay on your loan. Most lenders charge higher interest rates for less than stellar credit scores. So if you consider buying a house, work on raising your credit score to help you qualify for lower rates.
A minimum credit score of 620 to 640 is required by most lenders to approve a loan application. If you have a credit score of above 740, you are already in the best tier for a conventional loan program. But as your score goes lower, your interest goes higher. Improve your chances of getting the best rates by monitoring your credit scores. Make any necessary improvements to help your rates. If you have existing loans, make sure to pay off your balances. Also clear your past due accounts. Dispute any erroneous information you can find on your credit report.
Decide on the terms of the loan you’re planning to get
Deciding how long you’ll be keeping the loan is important. It will determine the kind of mortgage you’ll choose. If you want to get a lower rate, you must go for the shorter loan terms. Generally, mortgages that are spread out for 20 years have lower interest rates. Often as much as one-eighth percent compared to a 30-year fixed mortgage. If you will sum it all up, you can save thousands of dollars on interest rates by choosing a shorter loan term. You have to make sure that you can handle the higher monthly dues and avoid delayed payments.
Explore a variety of financial institutions
Interest rates vary per lender and financial institution. These rates fluctuate for several different reasons. The offer you get from one lender is not necessarily the same as what you’re going to get from another. Explore your options and shop for the best deals at various banks and credit unions. Don’t stick to one lender. Come up with a list of lenders so you can compare and choose the best mortgage rates that will suit your budget.
Make a larger down payment
Paying a sizable down payment is also another excellent way to get lower mortgage rates. You are increasing your chances of getting lower interest rates from the lender. It will also help shorten the terms of your loan. This should help you save thousands of dollars on the total loan amount.
Do your research
It’s easy to immediately say yes to the great offers of a mortgage lender. Especially if you haven’t done your own research. To make sure that you don’t only go with the lender your real estate agent recommends, it is best to do your own research. You have the right to negotiate your best deal and compare interest rates.
Don’t forget to ask about the fees
Some lenders will include the fees together with the total loan amount. Others separate them out. So before you sign anything, make sure that you are aware of any other fees you pay on top of the loan. A lot of the rates advertised by mortgage lenders only appear to be low because the fees are not yet included. It pays to ask.
Looking for the best mortgage rates may not be an easy task. You can use these tips to get the best deals in buying a house. For more information on mortgage loans, please visit Calcite Credit Union.