Finding the lowest interest rate for your new mortgage can save you a large amount of cash. Knowing how to go about finding the right mortgage will save you many headaches. Here is what you need to know about qualifying for the best interest rate. Know Your Credit Score Cleaning up your credit is the first step in qualifying for a better mortgage interest rate. If you are a homeowner that pays your bills on time you will qualify for a better mortgage loan. Having an on time history of repayment will boost your credit score; make sure you have at least six months worth of on time payments under your belt before applying for a mortgage. Reduce Your Debt to Income Ratio Paying down the balances on your credit cards will improve your debt to income ratio and your credit score. If you are a homeowner with a low debt to income ratio, this represents responsible use of credit to mortgage lenders. This makes you less of a risk and will net you a better interest rate for your loan. Get Your Interest Rate Guaranteed in Writing If your mortgage lender will guarantee your interest rate, this guarantee is valid for a period of time to allow you to close. If you are unable to close before this lock period ends the lender could raise your interest rate. Make sure you get the interest rate lock in writing and the lender gives you ample time to close on the mortgage. Save Money Open a savings account and start saving money. Building your financial assets will improve your application and allow you to prepay points if necessary. Some lenders will require upfront points to qualify for the loan; others will reduce your interest rate in exchange for paying points. Shop for the Best Mortgage Offer You need to shop from a variety of mortgage lenders to find the best offer. When shopping carefully compare interest rates, fees, terms, and closing costs from each mortgage offer you receive. Dont be afraid to negotiate for terms on your new mortgage. Most things on your loan contract are subject to negotiation; haggle with your mortgage lender to get what you want. To learn more about finding the best mortgage for your situation while avoiding common mortgage mistakes, register for a free mortgage guidebook. |
