When it comes to mortgages, there are many factors that go into getting the lowest rate. Your credit score, employment history, and location all play a role in securing a good interest rate.
However, there are some steps you can take to ensure that you get the best mortgage rate possible.
1. Research, research, research!
The best way to get a great mortgage rate is to do your research. Shop around with different lenders and compare rates, fees, and terms. Be sure to ask about any special programs that might be available, such as first-time homebuyer programs.
2. Know your credit score.
Your credit score is one of the most important factors in determining your mortgage rate. The higher your score, the better interest rate you’ll qualify for. So before you start shopping for a home, check your credit report and make sure there are no errors that could drag down your score.
3. Get pre-approved for a mortgage.
Many buyers don’t realize that they can get pre-approved for a mortgage before they even start shopping for a home. Getting pre-approved will give you an idea of what interest rate you’ll qualify for and how much house you can afford. It will also show sellers that you’re serious about buying their home.
4. Make a large down payment.
If you can afford to make a large down payment on your home, you’ll likely qualify for a lower interest rate. That’s because lenders view borrowers with larger down payments as less of a risk. So if you can swing it, aim for a 20% down payment or more.
5. Have a solid employment history.
Lenders like to see borrowers with a solid employment history. If you have gaps in your employment or are self-employed, you may have trouble qualifying for a low interest rate. So if possible, try to stay with the same employer for at least two years before applying for a mortgage.
6. Keep your debt-to-income ratio low.
Your debt-to-income ratio is the amount of debt you have divided by your income. Lenders use this number to determine how much of a risk you are when it comes to repaying your loan. A lower debt-to-income ratio means less risk for the lender and often results in a lower interest rate.
7. Choose a shorter loan term.
Mortgage rates are typically lower for shorter loan terms, such as 15 years as opposed to 30 years. That’s because lenders view borrowers who will pay off their loans more quickly as less of a risk. So if you can afford the higher monthly payments that come with a shorter loan term , it may be worth considering .
8. Refinance if rates drop.
Mortgage rates fluctuate all the time, so even if you lock in a great rate, there’s always the chance that it could go down further. If rates do drop, consider refinancing your loan to get a lower interest rate.
9. Don’t be afraid to negotiate.
Remember, lenders want to make loans, so don’t be afraid to negotiate on things like points , origination fees, and even your interest rate.
10. Know when to lock in your rate.
Once you’ve found the perfect mortgage, it ‘s important to lock in your interest rate before it changes. Most lenders will give you up to 120 days to close on your home, so there ‘s no need to rush into things. Just be sure to lock in your rate within that time frame so you don’t end up paying more than you have to.
If you follow these tips, you’ll be on your way to securing a great mortgage rate for your home. Just remember to shop around and compare rates from different lenders before making a final decision.
With a little patience and effort, you can save yourself a lot of money in the long run. Thanks for reading!