Very few buyers have the financial resources required to pay for the purchase of a home in cash. Most people choose to finance their purchase with a mortgage loan. Mortgage loans are convenient, but they can also be costly.
The amount you can expect to repay over the life of the loan will be determined by the interest rate associated with your mortgage. Most buyers think that they cannot control mortgage rates, but there some some simple things that you can do to ensure you get the best possible rate for your loan.
1. Improve Your Credit Score
The mortgage rate that you qualify for will be based, in part, on your credit score. Lenders use a credit score to determine the reliability of the applicant seeking financing. If you have a high credit score, you will be viewed as a low-risk borrower and have access to the lowest mortgage rate available.
If your credit score is not so great, you can expect to pay more in interest on your mortgage loan. Your credit score can be controlled by carefully monitoring your credit reports. Dispute any inaccurate information with the credit bureaus and make all of your payments on time to keep your score high.
2. Save for a Down Payment
Today's buyers have access to many low and no down payment mortgage loan products. While these loans can seem appealing, you may end up paying a higher interest rate than you would if you have money to put down on a home.
You can control your mortgage rate by increasing your down payment. The more you are able to put down, the more likely your lender will be to offer you a lower interest rate.
3. Adjust the Loan Term
Another factor that is within your control when it comes to mortgage rates is the repayment term of the loan you select. Many buyers choose traditional mortgages that are repaid over a period of 30 years. These loans result in lower monthly payments, but they also have a higher interest rate than a loan with a shorter repayment term.
Ask your lender to compare information for both a 30-year mortgage and a 15-year mortgage. If you can afford the higher monthly payments of a 15-year mortgage, you can enjoy the lower interest rates associated with these loans.
Take action to control all of the variables that you can to ensure you get the lowest mortgage rate possible. You can contact a mortgage rates service company in your area for more information.
