What 4 Things Will Help You Obtain a Better Mortgage Rate?
Are you looking to purchase a home but the increase in mortgage rates have you a little on edge? Don’t worry, you are not alone. Most potential buyers are feeling a little unsure about interest rates in today’s market.
Here are four things you can do as a potential buyer to secure the best possible interest rate for your purchase.
1: Your Credit Score.
Having a good credit score is crucial to obtaining a good rate. A credit score is a number from 300 to 850 that rates a buyer’s credit worthiness and predicts how likely you will pay back your loan on time. The higher the number, the better a borrower will look to lenders. According to Freddie Mac, “When you build and maintain a strong credit score, mortgage lenders have greater confidence when qualifying you for a mortgage because they see that you have paid back your loans, in the past, as agreed.”
2. Your Loan Type.
Once you start shopping for homes, you will also begin shopping for mortgages to see what loan type is the best for you. There are several different types of mortgage loans that vary in rate and eligibility requirements. When working with your agent, you will determine what is available in your area and what you can qualify for.
3. Your Loan Term.
Another factor is the term of the loan, how long it will take you to repay the loan before you fully own the property? This term will also affect your rate, monthly payment, and amount of interest you will pay over the course of the loan.
4. Your Down Payment.
General rule of thumb is the larger the down payment, the more likely you will have a lower interest rate. This is because most lenders see a lower level of risk when a buyer has put more money down to purchase therefore having a bigger stake in the property. Usually putting 20% down will guarantee a better interest rate.
Of course, it is always best to reach out to your local agent and expert, in the market you are shopping in, to guide you through the process to determine the best way to obtain a lower interest rate.
Whether you want to sell your existing home, buy your first home, upsize, downsize, purchase a vacation home, or just talk about options, a real estate professional is your best source for information based on current trends in our area. If you're interested in learning more about the 2022 real estate forecast, don't hesitate to reach out - we're happy to help!