Monday, January 30, 2017, AM | Leave Comment
Because homes cost so much to buy these days, most buyers need a mortgage to afford one.
The most common payback term for a mortgage is 30 years, which means you wind up paying more in finance charges than you did for the house.
With such a long period, even a tiny decrease in the interest rate could save you thousands of dollars.
Here are four secrets to locking in the lowest mortgage possible.
Keep Your Credit Score High
One of the most important factors in how low your mortgage interest rate is is how high your credit score is.
Borrowers with very high scores, usually above 750 on the FICO scale, get the lowest mortgage rates.
If your score isn’t as good, you might get a slightly higher rate, so do all you can to keep your credit score high. That includes paying bills on time and paying down debt.
Shorten the Term
The shorter your loan term is, the lower the interest rate will be.
For example, the rate on a 15-year mortgage is generally about half a percentage point lower than the rate on a 30-year mortgage.
This means you save tens of thousands of dollars on finance charges over the life of the loan while paying off your mortgage much faster.
The drawback, and it’s a big one, is that your monthly payment will be considerably higher.
Work With a Realty Agency
Your real estate agent can be a valuable resource for finding the best mortgage deal.
He or she can point you to lenders to help you shop around to find the lowest rate.
Some professionals, like Marsee Wilhelm’s real estate team know how nice it is to have a small mortgage payment each month.
Take the time to investigate real estate professionals and decide which one is best for you.
Points are upfront fees you can pay to reduce the interest rate on your mortgage.
Typically, one point equals 1 percent of your mortgage amount and it will lower your interest rate by a quarter of a point.
So if you have a $200,000 mortgage at 4.5 percent, you could pay $2,000 and get it lowered to 4.25 percent.
That would save you about $30 a month, which is more than $10,000 over the life of a 30-year mortgage.
Getting the lowest rate possible on your mortgage is key to saving money on your home purchase. Be sure to shop around and get more than one quote. Beyond that, you can use some or all of these secrets to help find the lowest mortgage rate possible.
Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on twitter and Facebook.