4 Ways to Get a Good Mortgage Rate
Monday, February 10, 2020, 6:00 AM | Leave Comment
If you’re ready to buy a home, one of the biggest challenges you’ll face is how to pay for your new property.
Unless you’re independently wealthy, you’re probably going to have to take out a mortgage so you can pay for your home over time.
To save money, then, the most important thing you can do is to work hard to get the best mortgage rate, as this could save you thousands of dollars in interest over the term of the loan.
To help you get a great mortgage rate, here are three things you can do.
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Take Time to Save
A mortgage is ultimately a loan on the amount of the purchase price of a home that’s left over after you pay the down payment. Since a mortgage that represents a larger percentage of the purchase price represents a greater risk for the mortgage company, it follows that one way to get a good mortgage rate is to put more money down.
Of course, 20% of the purchase price is the amount that’s typically recommended. However, if you can be patient and save more than this, your mortgage rate will often be more attractive, and you’ll have more loan products to choose from.
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Look Into Special Programs
Since home purchases drive a major portion of the economy, there are many incentives available for different groups to help make buying a home more achievable. In many cases, the incentive that is offered is a better mortgage rate. It helps to take a look at different mortgage programs, then, to see what special rates might be available to you.
If you’re in the military, if you’re a first-time homebuyer, if you’re affiliated with any number of organizations, or if you meet certain other criteria, you could find yourself with a better mortgage rate than you ever dreamed you’d receive.
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Respect Your Credit Score
A major factor in determining your mortgage rate is your financial history, including your credit score. That’s why it’s crucial that you work to maximize your credit score before you apply for a mortgage.
While a few points likely won’t make much of a difference, if you have major issues with your score, you’ll wind up paying much more than you would if you took the time to improve your score. The best step you can take is to pay down debt, as your debt-to-available-credit ratio is a critical factor in determining loan rates.
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Eyes on the Prize
Applying for and obtaining a mortgage can be a challenging process, especially if you’ve never done it before. With a good lender at your side to help you navigate your different options, though, and with enough patience to make the right financial moves, you’ll be well on your way to a great mortgage rate that will allow you to pay off your home more quickly.
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Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan
