When it comes to getting a home loan, there are a variety of factors that can impact your mortgage rate. Of course, when it comes to mortgages, your mortgage rate has a big impact on how much you pay over the course of the loan. Even a slightly lower mortgage rate can save you thousands of dollars. While many are concerned with how much of a loan they qualify for and their monthly payment, it's very important to pay attention to mortgage rates. Here are three ways to get a lower mortgage rate on your home loan.
Improve Your Credit Score
When it comes to interest rates on home loans, the higher your credit score, the lower your interest rate. This means that if you have a high credit score, you will end up saving more money over time. Taking steps to improve your credit score can mean saving thousands when you apply for a home loan. A few things that you can do to improve your credit score include paying your bills on time, paying down debt, checking for mistakes in your credit report, and also keeping your credit card utilization to under 30 percent of your credit limit.
Another thing that you can do in order to find low mortgage rates is to shop around. There are a variety of lenders to choose from ranging from credit unions to national banks to online lenders. Finding the lowest rate is easier than ever. If you are having difficulty finding a lower mortgage rate on your own, a mortgage broker may be able to help. They can find the lowest rates possible and do the shopping around for you. Typically the cost of a mortgage broker is between 0.50 and 2.75 percent of the loan amount.
Put Down A Higher Down Payment
If you want a lower mortgage rate, putting down a larger down payment may help. This sends the message to lenders that you are serious about owning a home and that you are reliable. Many lenders will offer lower rates to those who have higher down payments. Down payments of 20 percent or more also allow you to avoid paying for private mortgage insurance, which means additional savings each month.
If you are looking to buy a home, your mortgage rate plays a key role. The lower the rate, the more you save. A few ways to lower your mortgage rate include improving your credit score, shopping around, and putting down a larger down payment.