Are you interested in securing the best mortgage rate possible for yourself or your family? Of course you are, who wouldn’t want that. There is no magic bullet, but there are some helpful, practical steps to ensuring you’re in the best spot.
HERE IS WHAT TO DO…
BOOST YOUR CREDIT SCORE
By boosting your credit score, lenders will value your ability to pay off the debt and won’t see you as a risk to default on the loan. They reward you with this by decreasing the rate on your loan. Take a look a this blog post for some helpful ways to boost your credit score. CLICK HERE
IMPROVE YOUR DEBT-TO-INCOME RATIO
This ratio is determined by calculating the amount of money you make versus how much you owe. Pay off other outstanding debts or make larger payments on credit card balances to improve your ratio. Lenders will give you a better mortgage rate if you don’t have a large amount of outstanding debt.
DECIDE ON A FIXED VS. ADJUSTABLE RATE LOAN
If you may not be planning to stay in your house for over 5 years or 10 years, an Adjustable Rate Mortgage (ARM) may be a good option instead of a fixed rate. With ARMs you get a lower rate that is locked in for usually 5 years and then the rate can go up by only a set number of percentage points.
CONSIDER A SHORT-TERM LOAN
If you can afford to make higher monthly payments, by choosing a 15-year loan, you will lower your interest rate. The difference in the rate between a 15-year and 30-year loan could be up to 0.8%! It can also save you money in the long-term as you are not charged interest for a full 30 years.
PLAN FOR A LARGE DOWN PAYMENT
Having a large down payment can save you a lot of money. A large down payment allows you to take advantage of bigger loans, smaller interest rates and more attractive closing fees. Most loans require 5-20% as a down payment or require the buyer to purchase mortgage insurance.
SHOP AROUND
Finding the right lender with the right rate is key in your mortgage experience. Don’t be afraid to look online or talk to multiple lenders. At Princeton Mortgage we know there is a lot more that goes into a mortgage than just a rate, so we will make sure you have a solid grasp of all intricacies so that you can make an informed decision.