In last week’s blog we talked about how to get the best interest rate on your home mortgage. From buying down your rate with points, an adjustable rate mortgage (ARM), and a shorter term loan.
There are a few other ways to get a lower interest rate
Make a larger down payment
When the borrower makes a larger down payment, the lender sees this as less risky. Which can lead to a lower interest rate. A larger down payment also means lower monthly mortgage payments over the life of the loan.
Another benefit of a larger down payment (20%) on a conventional loan, is you may be able to avoid paying for private mortgage insurance (PMI).
Additionally, you can save the cost of an appraisal, many lenders are now offering appraisal waivers with a larger down payment (10%)
Qualify for the right loan
Yes, you can make little to no down payment and still get a lower interest rate, you just need to qualify for the right type of loan. Conforming, VA, USDA, and FHA, are all great loans, but if you want the best deal, you need to find the best loan that fits your profile.
For instance, VA loans are for qualifying veterans, active duty military members, or surviving spouses. Conforming loans offer lower rates with good credit, while FHA loans are typically cheaper if you have poor or fair credit. USDA loans are for properties in rural areas.
There are many other types of loans in the market, working with a mortgage will give you access to lenders you’ve never heard of.
Make lenders compete for your mortgage
To get the best financial deal, it is wise to shop around for the best lender. This is what a mortgage broker does, they know the industry and work with multiple lenders.
A mortgage broker fits home buyers and those looking to refinance with the best program that fits with their financial needs. This will secure a more favorable interest rate on your mortgage.
