Whether you are considering purchasing a new home this year because it is a wish or whether it is a “must do,” you may find mortgage rates to be an issue. There are ways to get lower interest rate.
- Choose a Real Estate Broker/Agent that understands the mortgage process and can help you navigate the options. Shop for the best mortgage rates! You have several options for finding the best rates. Research Mortgage bankers, regional banks, national banks and local credit unions. They have distinct loan products with their own rates and their own fees. Some lenders cater to new homeowners, others are just better for refinancing.
You will want to carefully compare your choices, do your research and make sure your’re getting the right deal. You will want to check frequently as rates can change rapidly.
- Improve Your Credit Score – the higher your score the less risk for a lender. Lower scores are indicative of a higher risk. If you apply for a loan and have a good credit score the more likely you are to get a lower interest rate.
You can work on improving your score by paying off outstanding balances that are showing on your credit. Pay off all that you can and keep making payments on a timely basis. Continue your efforts until you get that score up. A score in the low 600’s will work but the interest rate will be higher. The better rates are not achieved until you are in the 700’s. The better your credit score the better your mortgage rate! Choose Your Loan Terms Carefully – Short term loans, ie 15 year mortgages are less risky and usually carry a lower loan rate. These shorter term loans will have larger monthly payments since you are paying off the principal in a shorter length of time. The longer term loans, ie 30 year mortgages will have a lower monthly “out of pocket” payment as you will be paying off the principal over a longer period of time.
- Make A Larger Down Payment – If this is possible for you, then this could be a great option as less principal means a lower monthly payment, probably a lower interest and more immediate equity.
- Buy Mortgage Points – If you are making a long term investment in your home buying mortgage points might be a smart way to save money. Each point is valued at 1% of your loan. For example: to buy down the interest rate by 1% on a $300,000 mortgage would cost $3,000. At 7% interest rate, you would pay $6.65 per thousand dollars of loan or $1995.00 per month for principal and interest. A 1% discount to 6% would cost $6.00 per thousand dollars or $1800.00 per month principal and interest. This is a savings of $195.00 per month. At this rate it would take 15.4 months to recoup your $3000 upfront investment. Thereafter, you are saving $195.00 per month for the duration of the loan. REMEMBER discounts points can be negotiated as a seller’s contribution during the transaction process.
- Lock In Your Mortgage Rate – If you are quoted a good interest rate you may be able to lock in that rate until the closing date. This can protect you from having to pay a higher rate if the rates go up. Listen to your mortgage professional and weigh your options.
- Refinance Your Mortgage – Over a 15 or 30 year term mortgage you can be assured that interest rates are going to change. If interest rates drop it would be smart to consider refinancing. It does cost money to do a refinance but over the long haul there may be a substantial amount of savings.
Start your home search at: http://www.bridgewayproperties.com. The easy search tools will allow you to look and save searches for the major Tulsa area and surrounding cities and communities. You may reach me at 918-965-1954