When you’re shopping for a house, one of the best strategies you can employ is looking around for the lowest rates. A lower interest rate can save you thousands of dollars or more over the course of the time you’re paying down the loan. Today, we’re going to look at the best ways you can research, compare, and ultimately find the best possible mortgage rates.
3 Ways to Shop For The Lowest Mortgage Rates
When you look at the interest rate for a mortgage, and you add the totals together over the long amount of time you pay for a house, you’ll see how much it adds to the principle cost of the loan. Even a percentage point along can save you a lot of money.
Here are three ways to ensure you’re getting the best possible rate.
1. Contact Different Types of Financial Institutions
Our first tactic involves doing a little shopping amongst the types of organizations that offer mortgage loans. Among places like banks, private lenders, and others will all offer different interest rates that can fluctuate wildly based on a number of factors.
One particular factor is promotions that are designed to entice borrowers to choose one institution over another. To bring them into the fold, these promotions will often involve lower interest rates than the competition.
What this means for you, is that you should look at a variety of different lenders when searching for your ideal interest rate. Check banks, private lenders, credit unions, and anything else you come across.
2. Bring up Your Credit Score
Your credit score has a big influence on your mortgage rates. Typically, a minimum score of 620 to 640 is required, but the a score of 740 or higher will place you in the top tier of interest rate options.
The best way to quickly improve your score, is through credit repair. Credit repair is simply the process of using a monthly service to pinpoint and dispute any inaccurate elements on your credit report. Things like incorrectly labeled late payments, multiple collections for one incident, and other items may seem small, but they can create big problems in your score.
By removing these unfair elements, you can quickly raise your credit score. Simultaneously, you can also make larger payments on your cards to bring the balance down to 1/3 of the total line of credit.
If you’re interested in credit repair, check out this in-depth review of Sky Blue Credit: www.debtsteps.com/sky-blue-credit.
Ultimately, having a credit score in the 740+ range for FICO scoring is the best way to achieve the lowest possible interest rate.
3. Have Your Answers Ready
Your final estimated interest rate is based on a number of different answers that you provide to several questions:
- How large is the down payment?
- Are you purchasing a single-family home or a condominium?
- Are you purchasing your refinancing?
- Do you intend to waive escrow and pay taxes/insurance yourself?
All of these questions will help you get a better interest rate if you have prepared your answers ahead of time. For example, if you have a larger down payment, you can lower the lower the interest rate.
Choosing a single family home over a condominium is also effective. Condos tend to have much higher interest rates. In another scenario, if you waive the escrow and pay your taxes and insurance yourself, you can get a higher interest because this is considered a riskier loan.
Given this information, you should also be shopping around. Even if your real estate agent recommends a specific lender, you should do your own research and compare rates.
Finding the optimal interest rate for your mortgage will offer you a lot of savings over the course of the loan. How do you ensure the best possible rate? Let us know in the comments!
January 14, 2017