If you’re buying a home, you’ll likely need to get a mortgage. However, you need to make sure you know what you’re doing. A mortgage is a loan for a large amount of money and you are responsible for paying it back. If you don’t understand something about your mortgage agreement, talk to a lawyer or your provider before you sign the paperwork. You’ll need to know are mortgage rates fixed or not? This will determine how your monthly payment is calculated.
Make sure you look into the current climate to determine whether it is a good idea to get a mortgage. Are mortgage rates good right now? If they are, it might be a good time to buy. Are mortgage rates rising or falling? Keep an eye on these numbers as you consider buying a home. Are mortgage rates up or down today might not give you solid information, but a regular pattern can help you make a decision. So talk to your lender, as well as anyone who can give you good advice on what to do.
Nearly everyone who buys a home takes out a mortgage to do so, and since the average price of a home is well into the six-figure range, your mortgage is likely to be the biggest financial commitment you ever make. Because of that, you want to make sure you get the best deal possible. Here are some ways you can get the lowest interest rates for home loans.
Your credit score is the most important factor when it comes to determining rates for home mortgages, so you should ensure yours is in good shape before applying for a loan. Even though you can get a mortgage with a FICO credit score as low as 620, to get the best rate, you generally need a FICO score somewhere in the 720-750 range. If your score is lower than that, you will will not qualify for low rate mortgages, which can add tens of thousands of dollars in extra finance charges over the life of your loan.
The amount of down payment you have also figures into your mortgage costs. Though your down payment amount usually doesn’t affect your interest rate, it can have an effect on the costs of your loan. Though you may be able to get a loan with as little as 3.5% of the purchase price as a down payment, if you aren’t able to put down at least 20%, you likely will have to pay for mortgage insurance, which adds to your monthly payment cost.
Shopping around for your mortgage with more than one lender can help ensure you get the lowest rate you can. Different lenders have different underwriting standards. For example, local mortgage lenders might focus on different criteria than online mortgage lenders. There also can be a difference in costs. Online lenders might offer lower rates because they have lower overhead. On the other hand, local mortgage lenders may offer special rates to existing customers, so you always should check with your own bank.
While following these tips can help you get the lowest mortgage rates, there are a couple of other things you should keep in mind to ensure you get your mortgage. While you are going through the process, don’t change jobs and don’t make any major purchases. These are two things that could cause a lender to decide you are too big of a risk.