Tips for Lower Mortgage Rates
Purchasing a house is certainly your life’s biggest financial investment. Thus, finding the best and lowest mortgage rate is often an overwhelming process. This is particularly true for first time home buyers. Lower mortgage rates can save thousands over the course of a 30 year loan.
Mortgage rates vary and get affected by many factors, as discussed below. The difference means a much lower or even a much higher monthly payment in addition to thousands of dollars in terms of interest payments throughout the life of your loan.
So if you want to find the lowest mortgage rates you must get familiar with the key criteria that every lender evaluates, in addition to tips that can help you get a lower mortgage rate.
Good Credit Score
The foundation of getting a low mortgage rate starts with keeping the credit score as much high as it can be. Credit score matters for lenders and they take it as a road map to the borrower’s creditworthiness. If you have a good credit score it alleviates worries. On the other hand, a low score may entice your lender to charge a higher mortgage rate or even deny mortgage in the first place.
Maintain a Consistent Work History
In addition to good credit history, it is great to show your lender a consistent and long work history. In case you are working at the same company for several years, show growing or consistent annual income. This will let lenders give you a house loan with lower or an attractive rate.
On the other hand, if you frequently change jobs, lenders may become leery of offering you a big loan considering your inconsistent or unstable income.
Shop Around To Get Best Rate
The smartest move you can make is to look around to get the best possible mortgage rate. It is very easy to shop around nowadays than it was 15 years back, thanks to the internet. Simply compare the mortgage rates of national banks against online banks or even local credit unions to check and select the financial institution offering the best and most attractive rates.
Credit unions are the best place to shop around as they ask for lower fees than other conventional banks. They also work with borrowers who don’t have good credit profiles.
Put Some More Money Down
What amount of money are you actually willing to put down in terms of down payment? Think about it. If you are getting a small home your bank may charge you a higher rate to make a decent profit. But if you plan to get jumbo loans, they are considered to carry more risk for your bank and come with a higher interest rate.
So if you wish to get a lower mortgage rate then put more money down on an expensive or higher home priced purchase and land in the spot between those two figures. When you put down enough money to reduce the home loan out of some jumbo loan, it can help you save thousands of dollars over the period of the loan.