The mortgage rate can make a huge difference in how much is paid in interest over the life of the loan. Even a small difference can save or cost homeowners thousands, so it’s important to get the best deal possible when shopping for a mortgage. The following tips can help potential home buyers make sure they get the best rate possible for their new home.
Know What’s Important for Mortgage Rates
There are a number of factors that can influence the mortgage rates for a prospective buyer. This includes the loan term, whether it’s a fixed or variable rate, the lender used, and the current mortgage rates set by the government. Potential buyers can check out an Arizona mortgage calculator to see how their mortgage payments can vary based on different factors. This gives buyers the ability to see what they can do to minimize how much they pay over the life of the loan or reduce their monthly payments as much as possible.
Check Credit Scores
Prospective buyers will want to check their credit score to see what it is and whether it can be improved before they apply for a mortgage. Lower credit scores will mean a higher interest rate, so it’s a good idea to get the credit score as high as possible. This may be done by removing any inaccurate entries, paying off debt, and taking other steps. Some steps to improve credit scores can take time, so it’s important to start working on improving it as early as possible. It may also be a good idea for buyers to freeze their credit until they are ready to apply for a mortgage to prevent issues like identity theft that could impact their ability to be approved.
Consider Buying Discount Points
It may be a good idea to save up extra money and look into buying discount points. Often, lenders will allow buyers to pay for discount points that reduce the interest rate on the loan by paying part of it upfront. The amount paid for the discount points can vary based on the lender and the total mortgage amount, so it’s a good idea to ask the lender for the cost of discount points before deciding to do this. However, if it is possible to buy discount points, it can help to reduce the interest rates significantly.
Understand How to Lock in a Rate
Rates fluctuate significantly, so it is a good idea for prospective buyers to lock in their mortgage rate when they can. Lenders will typically lock in the rate for between 15 to 60 days, so it’s best to do this when under contract and know that closing will happen in time. Ask about float-down options before locking in the rate, as this will allow the rate to reduce if possible, but prevent it from increasing.
Before getting a mortgage, it’s a good idea to use the tips here to shop around for and lock in the best interest rates possible. There is a lot that prospective buyers can do to help reduce the amount they’ll pay in interest. Taking the right steps before getting a mortgage could help prospective homeowners save thousands in the long run and help reduce their monthly payments. Check out mortgage lenders today to learn more about the current rates and how to get a good deal.
