If you are querying how to get the best mortgage rate you have found the right article. Many home buyers wonder how they can get the best mortgage comparison rate. By following a few easy steps, you should be able to get an excellent interest rate on your mortgage.
How to get the best mortgage rate
Getting the Best Mortgage Rate – Your Down Payment
The down payment you make during the home purchase will impact your overall mortgage rate. The more you put down, the lower the interest rate will likely be. When you are working with a loan agent, you want to ask them to provide you with details on how much you put down versus how much the interest rate will be.
Keep in mind, if you put down a small down payment (less than 20%), you will have to pay PMI (private mortgage insurance) every month. The alternative is you will have to get a loan package that includes a primary mortgage and a secondary home equity loan. The second loan is always at a higher interest rate.
Getting the Best Mortgage Rate – Points
People researching how to get the best mortgage rate should understand what points are and how they work. A point is equivalent to 1% of the mortgage amount. So, if you are buying a home and getting a loan for $100,000, one point is from $1,000.
Many mortgage lenders will provide you with an opportunity to buy down your interest rate. You pay for a lower interest rate by paying 1 or more points. It Is a good idea if you plan to live in the house for at least three to five years or longer. Calculate the monthly payments at the various interest rate levels (the mortgage lender should be able to provide you with those details) and see if you are saving enough money each month to make it worth your while to lay out the points (points are paid at or before the Closing).
Getting the Best Mortgage Rate – Credit score
Your credit score has a direct impact on the interest rate you can expect. Make sure you take a look at your credit reports (from all three major credit bureaus) and clean up any mistakes or problems on them. It will help ensure you have the best opportunity to get the lowest possible interest rate.
Getting the Best Mortgage Rate – Locking-In
If you are striving to secure the best interest rate on a mortgage, it is important for you to understand the lock-in process. Virtually every lender will give you the opportunity to lock-in your mortgage interest rate. Basically, by a particular date you have to finalize your loan details and lock in based on the interest rate being offered on that day.
The amount of time you have to lock-in and the process of locking in may vary from lender to lender so make sure you have a full understanding of this. Also, make sure you know if there are any fees associated with you locking in.