If you’re looking to buy a home, you probably want to secure the lowest interest rate
possible for your home loan. Over the last couple of years, that was
easier to do as the housing market saw record-low mortgage rates, but
this year rates have risen dramatically. If you’re looking for ways to combat today’s higher rates
and lock in the lowest one you can, here are a few factors to focus on.
Since approval opportunities can vary, connect with a trusted lender
for customized advice.
Your Credit Score
Credit scores can play a big role in your mortgage rate. Freddie Macexplains:
“When you build and
maintain strong credit, mortgage lenders have greater confidence when
qualifying you for a mortgage because they see that you’ve paid back
your loans as agreed and used your credit wisely. Strong
credit also means your lender is more apt to approve you for a mortgage
that has more favorable terms and a lower interest rate.”
That’s why it’s important to maintain a good credit score. If you
want to focus on improving your score, your trusted advisor can give you
expert advice to help.
Your Loan Type
There are many types of loans, each offering different terms for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says:
“There are several
broad categories of mortgage loans, such as conventional, FHA, USDA, and
VA loans. Lenders decide which products to offer, and loan types have
different eligibility requirements. Rates can be significantly different depending on what loan type you choose.”
When working with your real estate advisor, make sure you find out
what’s available in your area and which types of loans you may qualify
Your Loan Term
Another factor to consider is the term of your loan. Just like with location and loan types, you have options. Freddie Macsays:
“When choosing the
right home loan for you, it’s important to consider the loan term, which
is the length of time it will take you to repay your loan before you
fully own your home. Your
loan term will affect your interest rate, monthly payment, and the
total amount of interest you will pay over the life of the loan.”
Depending on your situation, the length of your loan can also change your mortgage rate.
Your Down Payment
If you’re a current homeowner looking to sell and make a move, you can use the home equity you’ve built over time toward the down payment on your next home. The CFPB explains:
“In general, a larger down payment means a lower interest rate, because
lenders see a lower level of risk when you have more stake in the
property. So if you can comfortably put 20 percent or more down, do it—you’ll usually get a lower interest rate.”
To learn more, connect with a lender to find out the difference a higher down payment can make for your new mortgage.
These are just few factors that can help determine your mortgage rate
if you’re buying a home. The best thing you can do is have a team of
professionals on your side. Connect with a local real estate
professional and a trusted lender so you have the expert advice you need
in each step of the process.