An important step for getting a home loan is researching how to get the best mortgage rates. The mortgage industry examines several factors when determining whether you qualify for a loan, but it also factors in what interest rate you will be paying. There’s plenty at stake, and mortgage rates can vary by many percentage points depending on numerous factors.
The difference between a good mortgage rate and the best mortgage rate can mean a lower or much higher monthly payment. It can also save you tens of thousands of dollars over the course of the loan period. If you want to qualify for the best mortgage rates, you will need to ensure that you’re well-qualified. Here’s what you need to know about getting the best mortgage interest rates today.
Try Increasing Your Credit Score
One of the best ways to increase your chances of getting the best mortgage rate is to improve your credit score. It also raises the chances of you qualifying for a mortgage loan. Even a small improvement in your credit score can have a significant impact. FICO released recent interest rate data, which showed that if you improve your credit score from 660 to 680, your interest rate could reduce by 0.60% today. That will make a major difference over the course of the mortgage loan.
Save for a Larger Down Payment
Your loan-to-value ratio is impacted directly by your down payment, which is why saving for a larger down payment is essential when you’re trying to find the best mortgage rates. Even though you could still get good mortgage rates with a lower down payment, you should aim to save enough money and put at least a 20% down payment for the overall cost of your home.
You will need to borrow a lesser amount from the lender when you put a big down payment on your home, which means you pose a lower risk. As a result, that will help you qualify for lower interest rates on your mortgage.
Increase Your Income or Keep It Steady
When applying for a mortgage loan, you want to appear as a safe bet to lenders, which is why keeping a steady job with regular income makes you a better applicant. If you’re changing jobs frequently or if you quit your job before you apply for a mortgage, lenders will see you as a high risk. Lenders are willing to offer people who have steady jobs and increasing income with lower interest rates. They will look at your debt-to-income ratio, and the lower it is, the better your chances of getting the best mortgage rates from lenders.
Consider Applying for a Short-Term Loan
Short-term mortgage loans have a lesser risk for lenders because they won’t be loaning the money for a longer period. The interest rate will also be lower when you apply for a 15-year-fixed-rate mortgage instead of a 30-year-fixed-rate mortgage. You can also think about getting an adjustable-rate mortgage, as it generally has lower interest rates. Even though a shorter-term loan may be a good idea, you should consider that it will mean higher monthly payments.
Compare Different Lenders
The key to finding the best mortgage rates in the industry is to get quotes from multiple lenders and compare them with one another. The mortgage rates can vary from one lender to the next, which is why it will be to your benefit to compare different lenders before you decide on one. When comparing multiple mortgage rates, remember that the lowest rate doesn’t necessarily mean it is the best option. You must consider the APR, the fees charged by the lender, and more before you get a mortgage loan.
Even though we shared the most effective ways to find the best mortgage rates, you can also consider bringing in a co-borrower on your mortgage or buy a lower-priced home. Applying for a mortgage is a complicated process, but it becomes easier if your finances are in great shape, as that improves your chances of finding the best mortgage rates from lenders.
When looking to build their dream home through home financing, Delray Beach residents should contact the home financing experts at Ace Mortgage. We have the experience and knowledge to provide proper guidance and make this complex process simpler. Visit the Ace Mortgage website to learn more about how we can help you!