How To Get An Excellent Mortgage Interest Rate

Are you currently in the market to purchase a home, and need to pay for it with financing from a mortgage lender? A common concern is to avoid paying a high interest rate when getting approved. Here are a few tips that can help you get a good rate.

Apply With Multiple Lenders 

One thing that is unique about the mortgage process is that it can take a long time to get approved. Many people only work with one lender, and then get stuck with the rate given to them because they have not started the process with any other lenders. That's why it's important to work with multiple lenders up until the point where you are ready to lock in your rate. This will allow you to compare multiple rates and pick the best one for you.

Selects A Shorter Term

While many homeowners love the traditional 30-year mortgage because of the low monthly payments, it doesn't offer the best interest rate out there. If you can afford a higher monthly payment and want to pay less in interest, then consider a 15-year mortgage instead. The rate will be lower overall, which will be sure to save you some money over those 15 years. 

Buy Mortgage Points

Plan on staying in your home for a long time? Then you may want to consider purchasing mortgage points. Purchasing points essentially allows you to pay more upfront for your mortgage and get a lower interest rate in return. However, they are not always a good idea. There is a break-even point where the points will start saving you money, and it may not be for a few years until that happens. That's why it's only worth buying mortgage points if it makes sense based on the time you see yourself staying in the home. If you won't break even then you shouldn't buy mortgage points.

Clean Up Your Credit Report

A mortgage lender is going to base your interest rate on how big of a risk you are. Someone that is more of a risk will have a higher interest rate than someone that they feel is low risk. That's why you'll want to clean up your credit report before applying to a mortgage lender. Taking steps to pay off debts and fix errors will make you look more trustworthy to the lender and get a lower rate as a result.  

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