After years of hard work, it’s finally time to get your dream home. Of course, real estate is anything but cheap, and there are many aspects to consider. Like most people, you will want to find the best mortgage rate, for which a bunch of factors matter. The lender is, basically, interested in your ability to pay the loan as per schedule, so they will check everything that concerns the payment – credit score, income, income to debt ratio and more. The good news is you can actually use a few tricks to get a better mortgage rate.
Here are some quick tips!
- Focus on your credit score. A credit score of 760 or more is considered to be good for mortgages, but many factors may influence the rate eventually. Nevertheless, you have to improve the credit score, for which basic things, like repaying debts on time, reducing multiple loans and not carry dues on credit card forward, can be useful. You can read a few of our recent reports to know more on how mortgage rates are calculated.
- Your income documents are necessary. There’s a reason why lenders are so worried about self-employed applications. At the end of the day, mortgages are paid out of salary, so you have to make sure that employment documents for at least two years in place. If the bank is happy with what you earn, the rate can be lower.
- Consider paying a tad more. Traditionally, 20% is what most applicants pay as the down payment for the property, but if you choose to pay a tad more, you can save huge on interest. Also, bear in mind that mortgage insurance for lower down payments is expensive for obvious reasons – a cost you can reduce by increasing the upfront.
- Choose the right mortgage. Fixed rate mortgages may seem easy to understand, but if you consider the price paid in the long run, you are probably paying a lot more. Experts usually recommend going for an adjustable rate mortgage, which can have a low-interest period initially for the first five to seven years.
- Go for limited term. This, frankly, depends on your financial situation, but as a rule of thumb, you can actually save huge on interest for a smaller term. Consider what you can afford though before taking the call.
Discuss things with the lender, because mortgage rates can be negotiated, at least in majority of cases.