How to get the best mortgage rates for yourself?
A basic understanding of interest rates and the economic influences that determine the future course of interest rates can help you make financially sound mortgage decisions. Thus, when it comes to purchasing a new home, the mortgage rate you secure can significantly impact your financial future.
To have a better understanding of what best mortgage rates you can avail, it is extremely important to shop instead of accepting the first mortgage rate you receive. Here’s how:
- Check your free credit scores
Achieving and maintaining a strong credit score can be your path to lower mortgage rates.
Get your reports handy to check for any errors that might be dragging your score down. If you find inaccuracies, resolve them promptly.
A higher score can save you a substantial amount over the period of time you’ll be paying off your mortgage.
- Research your mortgage loan options
There are a wide range of mortgage options available in the housing market, so it is important to familiarize yourself with them. Mortgage loans come in two primary forms—fixed rate and adjustable rate—with some hybrid combinations and multiple derivatives of each.
The interest rate on a fixed-rate mortgage is fixed for the life of the mortgage; however, on average, 30-year fixed-rate mortgages have a shorter lifespan, due to customers moving or refinancing their mortgages.. On the other hand, The interest rate on an adjustable-rate mortgage (ARM) might change monthly, every six months, annually, or less often, depending on the terms of the mortgage.
- Conventional loans are backed by Fannie Mae or Freddie Mac and they are favored because for their competitive mortgage rates. Unlike government-insured loans, which typically require higher credit scores and larger down payments, but they do come with the advantage of more flexible terms and conditions
- First-time homebuyers favor FHA Loans because they’re backed by the Federal Housing Administration and offer more flexibility on credit scores and down payments. However, you’re on the hook for mortgage insurance premiums for the life of the loan.
- VA loans are designed for those who’ve served in the military, or their spouses. These loans are backed by the Department of Veterans Affairs and usually don’t require a down payment, unless your credit score is on the lower side.
- USDA loans help buyers in rural areas and often come without a down payment requirement. However, you’ll need to meet specific income guidelines and make sure the home you’re eyeing is in an eligible location
Assess your long-term plans and risk tolerance to decide which type suits your home purchase needs better.
- Get pre-approved for a home loan
It is always better to get a pre-approval done as it serves as a financial background check .
Not only does this give you a comprehensive view of the mortgage rates you could qualify for, based on your creditworthiness and financial stability. The letter also boosts your credibility in the eyes of sellers, making you a more attractive buyer.
For this, you need to prepare yourself for a bit of homework.
- Compare rates from multiple lenders
Now, is your time to shop…
Don’t limit your assessment to just one lender. Broaden your horizons by approaching a variety of lending institutions, including traditional banks, credit unions, and online lenders.
Take note of all cost that includes but not limited to, the interest rates, origination fees and closing costs.
Remember, the lowest interest rate doesn’t always equate to the most cost-effective loan. Think long term, analyze and assess a loan over long term and then come to a conclusion.
- Make lenders compete for your business
Use the rate quotes you’ve gathered from various lenders as leverage. Negotiate… don’t shy away. It’d a matter of your finances. Make it clear that you’re shopping around and willing to go with the lender who offers you the best deal.
This competitive atmosphere can work to your advantage, possibly nudging lenders to offer you a better rate than initially quoted.
Choose what is best for you. Happy Home Buying !!!
“Thanks for reading this article and for a hassle-free experience of purchase/sale of a home feel free to get in touch”.