Date of Posting : June 28, 2020
A lower interest rate can truly be a blessing if you are thinking of opting for a loan with a longer lifespan. It’s important that you plan well so that you can get the best mortgage rates! Let us take a look at 5 effective steps you can take to make the most out of mortgage loans:
Compare lenders to figure out the best rates
You need to apply to different online mortgage lenders so that you can get a fair idea about the various rates and fees that they charge. You should definitely get at least three to four quotes so that you have a legitimate point of comparison. Looking for multiple credit inquiries or rate shopping won’t lower your credit score!
Make sure your credit score is high
You must ensure that your credit score does not dip because that will determine how low your rate will be. Feel free to pull your scores from portals like Wallethub. Do not have the misplaced fear that pulling your score will affect it in a negative way.
You need to remember that your credit card balance determines your credit utilization ratio which makes up for a large percentage of your total score. So you need to try and ensure that all balances are cleared off from time to time.
If you have collection accounts, you need to do your best to remove them. You can either take up the dispute with the Credit Bureau. If the Bureau is unable to verify the account, they will have the account removed. You can also go for a pay for delete agreement in which the collection agency will agree to remove your account in exchange of a fixed payment.
Be an authorized user
If you have a friend or a family member with a positive payment history in their credit card account, you can ask them to add you to their account. After you become an authorized user of their account, their account history will feature on your report making it look more credible. This will also make its way to your scoring algorithm and boost up your scores.
Negotiation is the key
Use the different mortgage quotes to strike a deal with the lender. Remember that their quote is not sacrosanct and more than often the loan officer will try to push up fees and rates in order to get higher commissions. Take a quote from a leader and quote the same to another leader and encourage them to be competitive. Repeat this cycle until you get the best mortgage rates that are available. You can even bargain when it comes to the closing costs and origination fees.
Get a Government Home Loan
Government backed mortgages are not insured by the government making them riskier. It is guaranteed that the lender will get their money back and these result in lower mortgage rates. FHA loans also have simple down payment requirements and the qualifying guidelines are far from strict. If you are a vet then you should go for a VA loan because it offers the lowest available mortgage amongst all loans.
If you live in a rural area you can opt for a USDA loan because it comes with zero down payment and complete financing. There are also grants and programs specifically for first time home buyers. Before opting for a mortgage loan, make sure that you have done your research because a low mortgage rate can help you save thousands of dollars.