How to Achieve a Lower Mortgage Rate

conceptual look at variable mortgage rates

When you take out a loan, especially a huge home loan, the mortgage rate is one of the primary concerns. However, you really need to take a loan if you want to own your dream house.

In many cities like Utah, you can get a home loan with reduced rates. The experts and real estate brokers share some tips on how you can attain the best mortgage rate for your home. A reduced rate can save you thousands of dollars, even tens of thousands throughout the loan term, as some can be as long as 30 years.

Check the Rates of Multiple Lenders

It is always best to have many options, and the same applies to a mortgage rate. Apply online with different lenders and you would be able to compare the rates, fees, and charges. You can ask for at least three to four mortgage quotes.

There are many buyers who think that applying online or requesting a quote will adversely affect their credit score, but this has not been proven. FICO rules allow “rate shopping” and as part of consumer rights, there is a 30-day window to let mortgage lenders pull out your credit and not have a negative effect on your credit score.

Improve and Maximize Your Credit Score

The three-digit credit score is of the utmost importance when you intend to get a loan. It spells the difference between a manageable rate or having to take a hit with a high interest rate.

Credit scores play an important part in determining risks in granting a loan. It will be the benchmark of the lender when they evaluate whether the applicant can actually pay back their debt. If the credit score is high, the probability that the person will be faithful in their payments is high. This will make them more lenient and flexible with the rates—and this will increase your chances of getting a lower rate.

Try to find quick ways to increase your credit score. You can pay off your credit card balances and remove any collection accounts. These can be disputed with the Credit Bureaus or you may request for a “pay to delete” settlement scheme. Some collectors can still allow this arrangement since it would help reduce their work in chasing for payments. There would be some negotiating involved, and it can help prepare you when you haggle for your mortgage.

Leverage the Mortgage Quotes from Other Lenders

As mentioned earlier, you can request quotes from multiple lenders. After making that effort, you can use it to negotiate for a lower rate. This is because the rates initially quoted are not set in stone, as the agents also try to maximize the possible commission from your transaction.

If you are armed with quotes from other lenders, the agents may need to make a choice—beat their interest rates or lose you as a client. Some buyers have managed to reduce the closing costs and origination fees aside from the rate reduction.

Consider Taking Adjustable Rates

Mortgage loan agreement application with house shaped keyring

Financial experts note that 30-year fixed-rate mortgage is not always the most financially sensible choice for buyers. You can get savings if you choose a shorter period with lower rates. This is a financial tool used by those who may have intentions to resell the house. They can start at a lower rate even with a higher monthly payment. Even if it costs much, the interest rate is lower.

High mortgage and loan rates are a nightmare for any buyer, but as these tips show, there are ways to reduce the initial rates quoted. With the proper information, you can eventually get some financial breathing room.

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