When you’re ready to apply for a mortgage, you don’t have to settle for the first terms your bank offers you. Mortgage providers include banks, credit unions, and commercial lenders. The rates and terms offered by each will vary, and your financial circumstances will play a role in the rates you’re offered. Here are some things you can do to get a better lending rate when you apply for a home loan.
Opt for Automatic Payments
Agreeing to automatic mortgage payment deductions each month from your checking account could get you a lower interest rate. Having the payment electronically deducted will save you time and effort as well as giving the lender greater security about receiving payments in a timely manner. Since this payment option often requires maintaining an account with the lender, that could likewise lower your interest rate. Ask the lenders you are considering about these options to see if they will impact your mortgage interest.
Open More Than One Account
Having two or more accounts with a lender, especially a bank or credit union, may contribute to lowering your mortgage loan interest rate. Many borrowers open a checking and a savings account for that reason. They often put their major savings into an investment plan or an IRA while keeping a smaller savings account for emergencies at a local financial institution. Children’s accounts might not qualify, but separate checking accounts for the spouses may be acceptable in lieu of a savings account.
Make a Higher Down Payment
Putting more money down on your home purchase could help to lower the interest rate. A smaller home loan means potentially smaller monthly payments over the life of the loan and a faster loan payoff in the long run.
Build Your Credit Score
Pay off credit card balances and other creditors before applying for a home loan. Get a copy of your credit report to correct any errors, and ensure that you are paying everyone you owe. A strong credit score usually impacts the mortgage rate you are eligible for with a lender.
Consult a Mortgage Broker
Before applying for a home loan, contact a local mortgage broker to discuss your financial situation and preferred borrowing terms. Ask questions and consider the advice you receive while planning your home purchase. Knowing in advance how to get the best mortgage loan rate can help you prepare for the application process. They can also help you find a mortgage that best meets your needs
Use tips like these to negotiate for the best home loan possible. Saving money on your monthly mortgage payment adds up over time to reduce the amount of interest paid overall.