Tips For Securing The Lowest Mortgage Rates
While the lowest interest rate may not be the only deciding factor when choosing a home mortgage
, the lowest mortgage rate is definitely one of the keys to getting an affordable mortgage. A low interest rate on your mortgage means both a lower monthly payment and less money paid back to your lender over the entire life of the loan. Finding and securing the lowest mortgage rates, however, is sometimes easier said than done.
Keep your credit rating high
Your credit rating is the biggest determining factor in the interest rate that a lender will offer you, so keeping it high should be high on your list of priorities. Long before you start looking for a mortgage, you should be working on keeping your credit report clean and shiny. Learn about the things that will affect your credit rating, and work toward doing those that will affect it positively. Those things include paying your bills promptly, keeping your credit account balances low and maintaining a bank account for several years.
Put down a larger down payment
The amount of the down payment you can put on your house can affect the interest rate that youre offered by a lender. Thats because the more of your own money you put toward your house, the less statistically likely you are to default on your loan. While being able to put down twenty percent of the homes purchase price as a down payment is not a guarantee of a low mortgage rate, its almost certain to positively affect the interest rate that a lender is willing to extend. In addition, a twenty percent down payment will reduce some of the other closing costs and fees that you may be charged, since most banks and lending agencies dont require private mortgage insurance if you have at least a 20% equity in your new home.
Consider paying points on your loan
Paying points is essentially paying interest up front on your loan. While every lender differs in specifics, most lenders will reduce your mortgage interest rate by about one quarter of one percent for every point that you purchase. A point usually costs one percent of the loan. Thus, if you are taking out a $100,000 mortgage at 5.25%, you can reduce your mortgage rate to 5% by paying $1,000 for a point at closing.
Consider non-traditional lenders to get lower interest rates
Non-traditional lenders can often offer lower interest rates than traditional banks because they have far lower overhead costs. Dont ignore traditional banks, but do get quotes from finance companies and credit unions as well as other non-traditional lenders.
Get at least three quotes from different lenders
Comparison shopping is always the best way to get the best prices on anything, and mortgage interest rates are no exception. Ask for mortgage quotes from local lenders, banks, credit unions and online lenders to get a broad cross section of the best mortgage rates that are available to you.
Make use of online loan research tools
Take your mortgage search online. There are a number of online web sites where you can research loans and mortgages that may be available to you, including tools that allow you to request mortgage quotes from several different lenders at once. Using the internet can help you find the best mortgage rates, and may introduce you to lenders that you had not considered.
Bargain to get the best mortgage rates from lenders
Let loan officers know that you are actively searching for the lowest interest rates, and dont be afraid to drop the names of other lenders with whom you are dealing. When you get a low loan quote, you can use it to bargain with other lenders.
Be sure to consider all aspects of the mortgages you are comparing
While the mortgage interest rates are one of the most important factors in the overall cost of your loan, be sure to consider all aspects of the mortgages you are considering. Among the aspects you should compare are the reputation of the lender, the length of the loan, whether the interest rate is fixed or adjustable and the value of any particular perks that come with the loan. For instance, how important are flexible payment schedules to you? Those little perks being able to change the payment due date during the life of the loan, or being able to skip one payment a year can make an enormous difference in how easy it is to keep up with the terms of the mortgage.
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