Securing a low mortgage interest rate pretty much sounds like a gift from the heavens above. Most homeowners know that even a one percent difference can translate to thousands of savings. Here are three tips for getting lower mortgage interest rates:
1. Find the Best Loan for You
Finding the best loan for you is a must if you wish to get lower mortgage interest rates. According to Realtor.com, there are two types of mortgages: fixed rate and adjustable rate mortgages (ARM).
It is very important to know the difference between the two and find which one suits your needs and financial capabilities. The adjustable-rate mortgage is said to provide homeowners with a lower initial interest rate, but this can go higher in the long run.
It is also important to ask your lender if you qualify for certain special loans such as those who served in the military, first-time homebuyers, buyers from certain professions such as doctors or teachers, and loans for low-income residents.
2. Improve Your Credit Score
Improving your credit score means that you will also qualify for lower mortgage interest rates. While it usually takes an average of 30 to 60 days to get your credit score up, Forbes reported on 11 ways to raise your score quickly.
Some of the things you need to do include disputing errors then negotiate, checking for reported credit limits or getting yourself a credit card and paying the bills on time. If you already have a credit card, however, it would be wise not to overuse them, as the “credit utilization ratio” should be no more than 30 percent.
3. Lock in Your Interest Rate Before Closing
The aforementioned publication also reported that buyers may lock in their interest rates while it is still low even before they close on their home. The important thing to take note of here, though, is proper timing.
“In general, the best time to lock in a rate is after you’ve found the home you want to buy,” said Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage.”