Posted on: 8 January 2016
Getting a mortgage is a complicated process and it can sometimes feel like a second job. With a myriad of information needed by the lender and a large amount of paperwork that has to be filled out, it can feel overwhelming at times. If you're in the market for a new home but aren't sure you're being offered the best interest rate, here are some tips to help you get the lowest rate and overall monthly mortgage cost possible.
Clean Up Your Credit
Credit is extremely important when it comes to getting lower rates, so you'll definitely want to make sure your credit score is good and your report is current and up to date. Obtain a free copy of your credit report and look it over carefully to confirm that there are no mistakes on it. If there are any items you find that are in question, call and get them taken care of before you apply for a mortgage. If your FICO score isn't where you want it to be, consider paying off a few credit cards or other bills in full first. The lender will take a look at your debt to income ratio, so the less debt you have, the more you'll be able to afford when it comes to getting your mortgage.
Save For A Down Payment
While a down payment isn't always necessary to buy a home, it definitely gives you better purchasing power. Save up as much as you can before you look for homes. The ideal number is twenty percent or more of the home's total cost. If you can put down twenty percent, you can usually avoid paying private mortgage insurance, which can save you money long-term. Lenders also like buyers with a good sized down payment because it shows they're serious about the purchase and are more likely to pay on time, resulting in lower rates in most cases.
Understand Mortgage Terms
In order to make a smart buying decision, it's important to understand the different types of mortgage terms available. An adjustable rate mortgage means your payment can jump significantly as rates fluctuate, while a fixed rate mortgage means you will pay the same amount throughout the life of the loan. Interest only mortgages are tempting for new buyers because your payment only goes towards interest initially. However when the interest only period is over, the payments can jump significantly. As a buyer it's essential that you understand all of the different loan terms so you can make an educated decision. Talk to a mortgage broker like Premium Mortgage Corp if you have questions and they can help you decide which mortgage will work best for you.Share