When purchasing a home, you always want to get the lowest mortgage rate you can. For this reason, it is best to shop around. In order to do this, you want to begin with a plan. Here are some strategies to shop for, and qualify for, the best mortgage rates. Read: Best Mortgage Lending Companies for 2017.
Establish a baseline. Get a referral from someone you trust and contact that lender to obtain your credit score and discuss your loan options. Your first lender can help you compare conventional financing, as well as loan terms, so you can make an informed decision on which loan program you should use.
Increase your credit score. Conventional lenders charge a higher interest rate for lower credit scores. Raising your score can will help you get lower rates. Most lenders require a minimum credit score of 620. Work with a lender who can use a credit score simulator to advise you on what steps to take to improve your score.
Consider a shorter loan term. Shorter loan terms can get you a lower rate. You can save thousands on interest payments with a shorter term, although it is crucial to be sure that you can handle larger payments. See: Five Worst Mortgage Lender Banks – Business Insider.
Contact a mix of institutions, rather than just one. Some lenders who are eager to generate more loans might offer the best mortgage rates for homebuyers rather than refinancing homeowners. It’s best to try a mix of places such as a direct lender, a regional bank, a credit union, a community bank and a national bank. Read on: How to not Get Gipped When Shopping for a Mortgage.
Consider putting a larger down payment. The larger your down payment, the less of a risk you become to the lender. The bank is having to loan less money, and having more cash for a down payment than is required, means you likely have other equity.
• How large is your down payment?
• Are you buying a single family home or a condominium?
• Are you purchasing?
• Do you intend to waive escrow and pay your taxes and insurance yourself?
Do your own research. You should still do your own research, even after talking to the financial institutions. You should look online, ask around, and compare all of the numbers, so you can compare interest rates and negotiate your best deal.
Always provide the same information. Make sure when you request a rate quote that you provide all lenders with the same information. Mortgage rates change often, so you can’t necessarily get the same quote tomorrow. Here is some information that you should always be consistent about:
•The quality of your credit
•The location, type, and use of your property
•Size of your down payment or the amount of home equity you have
Here is a great video on how to find the best mortgage rates when looking to purchase a home: