When you begin the process of buying a new home, mortgage rates are likely to be on the top of your mind. How to get the best mortgage rates is a question you may be asking the more experienced ones among friends and family. Let us share with you some tips and tricks which will help you immensely.
Use a mortgage calculator: Start with a mortgage calculator which will put things in perspective. You will be able to know how much monthly payments you can afford to pay towards your new house and this will narrow down your search for the mortgage that suits you and the best rates. To use the calculator you will need to input a few details so keep this information handy. The information needed includes the house price, the loan term, down payment you need to make, the interest rate, insurance cost, property tax and the homeowners' association fee.
Employment proof: Lenders often like to see your steady employment status as your ability to pay back. If you have been employed for the last two years it is a huge positive versus someone who has had long stretches of unemployment.
Focus on your credit score: Having a great credit score is all important. A low credit score may not be favourable as it brings along borrowing terms that are not in your favour. The credit score is used by the lenders to calculate the risk they are taking in extending the loan to you. A higher credit score will assure the lender that you are less likely to default vis-a-vis a person with a low credit score and this will determine the interest rate too. A high credit score means a lower interest rate is likely to be offered to you. Work towards improving your credit score before you apply for a mortgage by paying your bills on time. You shouldn't default on your credit card payments either as this will reflect poorly on your credit score. Keep an eye on the score so that there are no clerical or computing errors either.
Make sure to save for the down payment: In the rush to buy a home most people forget to save up for the down payment. We must remind you that the bigger your down payment the lower your mortgage rate can be, more so if you can make a down payment of 20% of the house value.
Visit multiple lenders before taking the leap: Since your aim is to get the best rate possible you must do thorough research. This means getting quotes for interest rates from multiple lenders and then choosing what suits you the best. Also, look beyond the traditional lenders such as banks and explore private lenders too. Make comparison notes and then arrive at the best rate being offered to you along with the pros and cons.
If you are looking to find the best mortgage rate and need help do not hesitate to reach out to LendX.