If you’re looking to buy a home, one of the most important things to consider is the interest rate you will be charged on your mortgage. A higher interest rate means higher monthly payments, and a lower interest rate could save you thousands of dollars over the life of your loan.
So how can you get the best mortgage rate? Here are nine secrets to help you get the lowest rate possible:
- Shop around. Get at least three quotes from different lenders before you commit to a mortgage. Compare not only the interest rates but also the fees, terms, and conditions of each offer.
- Know your credit score. Your credit score is one of the key factors that lenders will consider when determining your mortgage rate. Check your credit report and score in advance so you know where you stand. Having a strong credit score will give you negotiating power with lenders and help you get a lower mortgage rate.
- Consider a shorter loan term. A shorter loan term will typically result in a lower interest rate, as lenders view it as a lower risk. If you can afford the higher monthly payments, consider a 15-year mortgage instead of a 30-year mortgage.
- Make a large down payment. Lenders typically offer lower interest rates to borrowers who make a larger down payment on their homes. If you can afford it, aim for a 20% down payment so you can avoid paying private mortgage insurance (PMI). This will also help you get a lower rate for mortgage loans in Wisconsin or wherever you are located.
- Have a solid employment history. Lenders like to see borrowers with a steady employment history. If you have been employed at the same job for several years, this will give you an advantage when negotiating for a lower mortgage rate. This is especially true if you have a good income and a strong credit score.
- Get pre-approved for a mortgage loan. Many lenders offer lower interest rates to borrowers who get pre-approved for a mortgage loan. This means that you have been approved for a loan up to a certain amount, and the lender is confident that you will be able to make the monthly payments.
- Consider an adjustable-rate mortgage (ARM). If you are planning on staying in your home for a shorter period of time, an ARM could be a good option. An ARM typically has a lower interest rate than a fixed-rate mortgage, but the rate can change over time. This could end up costing you more in the long run, so it’s important to understand the risks before you decide on an ARM.
- Negotiate with your lender. If you have a good credit score and a solid employment history, you may be able to negotiate for a lower mortgage rate. Don’t be afraid to ask for a better deal; the worst that can happen is that your lender says no.
- Lock in your mortgage rate. Once you’ve found a good interest rate, it’s important to lock it in. Mortgage rates can change daily, and if you wait too long to lock in your rate, you may miss out on saving money.
If you follow these tips, you’ll be well on your way to getting the best mortgage rate possible.