Everyone loves a bargain and getting a lower mortgage interest rate can save you a substantial amount of money over the life of your loan. There are several ways to go about ensuring that you pay the least amount of interest when you take out a home mortgage.
- Be aware of your credit score.
Good credit is the key to not only getting a mortgage, but to getting the best interest rates available. Mortgage lenders like to reward borrowers that pay off their bills in a timely manner. Chances are if you have been faithful with your other payments, you will be faithful to pay them back, so they can afford to take a risk on you and offer a lower interest rate.
We also recommend paying off collections and high credit card balances before applying for a loan. Keep your debt low and the amount of credit you’re using under 50 percent of what’s available to you. Always paying your bills on time is one of the best ways to maintain healthy credit.
- Be Transparent.
Don’t try to hide issues with credit and don’t embellish income or assets. Complete the application as accurately as possible and allow your mortgage professional to work with true facts to secure the best deal possible for you. Trying to hide credit problems or holding back requested documents can only work against an applicant by delaying the process and possibly even preventing a mortgage approval.
- Close any existing credit card accounts that you no longer use.
If you have several credit card accounts, they can affect the interest rate on your mortgage, even if they have a zero balance. Lenders see open accounts as potential for debt, which adds a risk of them not getting their money back. If you have an account that is not in use, and that you don’t intend to use, shut it down.
- Lock in interest rates before you close.
Lock in your rate with a pre-approval or if you have a firm deal, an actual commitment. If rates increase between your lock-in date and your closing date, you are protected. If they should decrease, you should still be able to get the lower rate. Rates can fluctuate drastically in the time it takes for you to get your mortgage and that could mean paying a totally different interest rate than what was originally quoted.
- Make the biggest down payment you can afford.
Putting a down payment from your savings on your house, lowers the amount you plan to finance, lowering the interest you will pay over the life of your loan.
Don’t focus solely on getting the lowest rate. Evaluate your overall budget, monthly payments and fees. Evaluate the other terms, conditions, closing costs, etc. It’s never only about the rate.
VERICO The Financial Forum Ltd.
“Your Connection To A Better Mortgage”
Together, We Make Mortgages Easy!