Looking to get the best mortgage rate? Here’s how you can find one.
It is important and advisable to shop for a mortgage from several competing lenders before finalizing any deal. When you’re planning to buy a home, getting the right mortgage is as important as the right house.
When you shop around you get an idea what different lenders are quoting. Rate shopping for buying a home is very important to save big bucks. It will give you a fair idea of percentage differences which can be a game-changer for you.
What can buyers do to squeeze the best deal in today’s competitive market? From simply staying consistent in finding out ways to get the best rates in today’s highly competitive market.
Look for trusted sources for recommendations – Ensure to check the source of information that can be trusted. Check for the source before you choose and weighing in and out that you receive as the recommendation. A recommendation from industry experts can shed a light on the process, including do’s and dont’s learned from the experience.
Pay attention to what’s important for you – Basis on the information gathered through comparisons between lenders, it’s important to determine what is important for you. Understand the difference between needs and wants. Keep a target in mind while you’re shopping for the lenders.
Keep in mind your budget for the same – Take a closer look at your monthly income after meeting all your monthly expenses and calculate how much you should spend on a mortgage payment. Else you’ll risk your money out there in the open.
Even if you qualify for the loan amount as mentioned by the lender, it would be wiser to go only for the required necessary amount. It will help you comfortably afford the amount. It is important that you handle the monthly cash outflows with peace of mind, shopping for lenders will help determine which lender will offer terms that are right for you.
Prioritize your preferences - Every lender will have their own rates, features and conditions laid out for borrowers. After analyzing all details minutely, that is shared by the lenders, you should have enough knowledge by now to make an informed choice. This will help you in choosing an option that will not be a costly affair. Choose the one that best suits you considering your financial situation.
Location of the mortgage lender matters – It may not be a direct criterion to consider it, but creating a timeframe and deadline helps a lot. Location of the lender is also of importance while choosing the best one for you. If it is located in the vicinity, it will help you follow up for the processing of the loan and get the things done at a faster pace.
Credit report must be noteworthy – You may be surprised to know that a credit score is one of the most important factors in determining your creditworthiness, and rates are decided by lenders much on the basis of this report. This criteria to helps in making the hunt reach a conclusion. You’ll have to first look at the credit report and then begin the mortgage search effectively from your side.
Always keep the credit report updated - Take active steps in making the necessary amendments and rectifications where necessary, to keep up the credit score. It is important for you to keep a constant eye on your credit score. What may seem like a small discrepancy, can have an adverse impact on getting a mortgage which you deem fit for yourself. Any discrepancy must be rectified by contacting the institution responsible for the incorrect information.
Keep documentation handy –The required documents would be photo ID proof, tax returns, bank statements, asset statements, pay stubs, and detailed renting or purchasing history. Arrange all the required documents for applying for the loan. Keeping all the paperwork in place will make the task a seamless process.
If any amount is being handed over to you to assist you in making the purchase, you’ll have to show in a written statement clearly mentioning the amount as a gift and the relationship of the person handing over to you.
Take a closer look at different available options – There are tons of loan options to choose from which may give you a difference of a good 2-3% drop of interest rates. Not all of them will have the same terms and conditions and will differ from lender to lender. Some of the most popular options include fixed-rate interest, conventional rate interest, FHA (Federal Housing Administration), ARM (Adjustable Rate Mortgage), and VA loans.
Locking the mortgage rate
When you’ve find a mortgage loan and received preapproval, ask the lender to lock in the interest rate and provide you with a document in writing. This writing document should state the interest rate you locked in, the number of points you must pay, and how long the interest rate will be locked in before the offer expires.
Locking in an interest rate means that in-spite of a rise in interest rates within the specific time that you were guaranteed, you have the option of a mortgage loan for the lower rate that you locked in.
Locking in an interest rate is still a great idea if you are serious about purchasing a home soon.
Decreasing the loan term – 30-year mortgage loan tenure is not the only option while considering the possible loan term. A 15 year or 20-year tenure are also the possible options available. Opting for a different loan term may also be considered while availing loans.
If you can afford a slightly higher monthly payment, availing a loan for a shorter tenure will be helpful in repaying the funds at the earliest.
Having stable employment –A history of stable past employment works as a positive sign for the lender. Before determining the eligibility, the lenders look at past employment history. A history of employment with instability or unemployment may create hindrances in the loan approval. Even if it gets approved, there are chances of availing it at higher interest rates.
Put a good percentage of down-payment - Build up savings for down paying the amount for a mortgage. Borrowers who apply for a loan with lower loan to value ratio secures a strong stand in further reducing the lower interest rate.
Plan to get a down payment close to 20% which will lower the amount availed in a mortgage. The lower the fund availed, the lower remains the risk of not being repaid.
The above factors stated will help you in getting the best mortgage rate. As securing a mortgage is a long-term association, it should be worth the time and efforts spent by you. Take time and come to a conclusion only when you’re comfortable with the terms and conditions.