sponsor_07

The New Stuff

1056 Views

4 Tactics To Reduce Your Mortgage Rate


  1. Buy a Less Expensive House

We live in a society that equates a bigger, more expensive house with a better situation. However, it doesn’t always make sense to buy a more expensive house even if you are approved for it.

If a bigger mortgage makes you look like more of a risk to the lenders underwriters, you might be required to pay a higher interest rate. In some cases, if you get a very large loan (a jumbo loan), you might have a higher interest rate just on general principle.

Rather than buying a more expensive house, consider purchasing something a little bit smaller. Not only will you have a more affordable mortgage with a lower interest rate, but you will also smaller expenses in general. A bigger, more expensive house comes with higher property taxes, utility bills, and other costs.

 

  1. Improve Your Credit

One of the best things you can do for your mortgage rate is to improve your credit situation. Your best results come when you have excellent credit. If you want access to the best interest rates on a mortgage, you need good credit. Before you start house hunting, and looking for a mortgage, check your credit score and report, and pay for an official FICO score. This will help you get a good idea of how lenders view you, and it will help you figure out how to proceed.

If you don’t have excellent credit, take a few months to work on improving your situation. You can hire a credit repair company like Sky Blue Credit Repair which has been fully reviewed by CreditRepairExpert.org Monitor your credit so that you know whether or not the situation is improving. You can boost your credit score by paying your bills on time, and by paying down debt (but not cancelling credit cards quite yet). Work on getting your credit up to scratch if you want the best mortgage rate.

 

  1. Use a Bigger Down Payment

The heady days of zero down mortgages are mostly long past. However, that doesn’t mean that you can’t get a mortgage with a fairly low down payment. You might be able to get a mortgage with as little as 5{8f0e3f32237b5f9b05edd0017bd44f5c977dadbdc5f3c46fe5fcff72f8bbc052} down, and if you get a FHA loan, you can get away with as little as 3.5{8f0e3f32237b5f9b05edd0017bd44f5c977dadbdc5f3c46fe5fcff72f8bbc052} down.

However, if you want a better interest rate, and to avoid PMI (for a conventional loan), you need a bigger down payment. You can get a better interest rate with 10{8f0e3f32237b5f9b05edd0017bd44f5c977dadbdc5f3c46fe5fcff72f8bbc052} or 15{8f0e3f32237b5f9b05edd0017bd44f5c977dadbdc5f3c46fe5fcff72f8bbc052} down, and you can completely avoid PMI if you put down 20{8f0e3f32237b5f9b05edd0017bd44f5c977dadbdc5f3c46fe5fcff72f8bbc052}. FHA loans come with their own costs, so it helps to understand that situation, and consider a bigger down payment to help you move beyond the fees related to a FHA loan.

  1. Pay Points Up Front

You can also pay points up front. A point is 1{8f0e3f32237b5f9b05edd0017bd44f5c977dadbdc5f3c46fe5fcff72f8bbc052} of the mortgage amount. Each point you pay can reduce your interest rate by 0.25{8f0e3f32237b5f9b05edd0017bd44f5c977dadbdc5f3c46fe5fcff72f8bbc052}. Over the course of 30 years, this can make a difference. If you can pay points, that can help you avoid paying more over time. But this strategy often works best when you plan to stay in your home for a rather long period of time.

Bottom Line

The more you can do to prove yourself less of risk of default, the better your interest rate is likely to be. At the very least, you need to make sure that your credit situation is good order before you start looking for a house or applying for a mortgage. Getting a mortgage is such a big step that you don’t run into any unpleasant surprises while you’re sitting in the lenders office.

Save up money for a down payment, fix your credit, and consider what else you can do to improve your situation. You’ll end up with a better score, and save money over the long haul.

Recently Published

»

What problems can employment in a foreign country create?

Going abroad for work is something that many people aspire to do. ...

article image
»

Learn About the Positives That Are Involved With Company Formation

Among the best elements of beginning your very own organization is to ...

»

Four awesome trading tips for beginners

When it comes to investing some of your spare money or even looking ...

»

Why You Need To Hire an Immigration Lawyer

Not everyone willing to migrate to the USA needs an immigration ...

»

Leave your tax planning to professionals

As a money saving move, doing your income taxes yourself can be ...

»

Tips on Disease Prevention from Blue Cross in Moncton

Certain healthy behaviors will help you improve your overall health, ...

»

How California Taxes a Canadian Trust

As we discussed in a previous article, many Canadians are shocked to ...

»

Why and How to Seek Best Forex Signals To Trade Successfully

Reliable and dependable analysis and information may be the ...

»

Shares Allocation by opening a business in Hong Kong

After overseas company registration hong kong, a business has to ...