It’s extremely hard to get a mortgage without maintaining a good credit score. However, even without a spotless payment history, there are creative methods to get the lowest possible interest rate on a home mortgage. Lots of factors go into determining a mortgage interest rate. Here are some helpful hints designed to give borrowers a heads up on how to hack their way to low interest rates.
Everything is Negotiable
Closing costs can end totaling between 3 percent and 6 percent of the amount of your loan. These fees generally include an application fee, appraisal fee and a loan origination fee. Of course, there is no rule set in stone that you have to be the one to pay these fees. The seller can always be asked to pick up the tab under a concept labeled “seller concessions.”
Save Money With a Shorter Mortgage
Opting for a 15-year mortgage instead of a 30-year mortgage can substantially lower interest rates for a loan. The interest rate for long-term mortgages are usually as much as a percentage point higher than mortgages with a shorter repayment timeline. Additionally, this strategy can help reduce the overall cost of your mortgage and lead to significant savings.
Make Mortgage Lenders Compete for Your Business
The mortgage industry is competitive, but few borrowers use this to their advantage. Every lender should know you’re actively shopping around. Comparing terms helps borrowers get the best rates available. LendingTree is a quick and simple way to receive multiple mortgage offers from different lenders. This service is great way to see what type of rates you qualify for.
Always Ask for a Rate Lock-in Agreement
Of course, finding a lender and getting a good rate isn’t the final step in securing a mortgage. Once borrowers choose a lender, it’s absolutely necessary to speak up and ask for a rate lock-in. This agreement has to be in writing in order to guarantee that the borrower isn’t surprised by a jacked-up interest rate during closing.
A home purchase can be stressful and expensive. However, securing lower rates can save borrowers a significant amount of money. Borrowers should always be persistent and ask for the best possible rates during the purchase process. Don’t let a low credit score fool you into taking whatever rate the lender decides to offer.