In today’s competitive market, getting a great interest rate is more important than ever before. With the new mortgage rules, from amortization calculators to free online amortization schedule calculators, searching for a home has become more extensive and time-consuming. This article will learn some quick things you can do to make sure you get the lowest rate possible on your home loan.
1) Secure Your Rate
Variable rates move along with changes in economic trends and will likely rise when interest rates climb up. If rates are rising, it may be worthwhile to lock into a fixed rate sooner than later. Fixed-rate loans typically last five years or more, but they do not follow market fluctuations like adjustable-rate mortgages (ARMs) will.
Don’t forget that mortgage dealers make money when you take out a loan with them; sometimes, their profits come from closing costs and other extras, and sometimes from fees. Such a case explains why Jennifer Alsbrooks recommends that you should not be afraid to negotiate. Even if you’ve arranged to finance elsewhere, it can’t hurt to ask for a better deal. If you decide to finance your new home’s purchase with the dealer who sells it to you, remember that their commission is higher if they provide financing than secure outside financing through a traditional lender, including a credit union or a bank.
3) Down Payment
Typically, the larger the down payment on a loan, the lower one’s interest rate since lenders take less risk when they see a large sum of money as collateral versus a small sum of money put up by a borrower. A 20% down payment may not always be possible, but if you can provide more cash upfront, it will almost always reduce your monthly payment and save you significant money over time.
4) Shop Around
If the interest rates have reduced since you took out your first mortgage, don’t be afraid to talk with a couple of lenders about refinancing. In addition to saving money on interest charges, refinancing may allow you to reduce your monthly payments or shorten the period you will pay your loan.