10 Tips for Getting the Best Mortgage Rate

When you’re ready to finally take the leap into home ownership, your mortgage rate will likely be among your top concerns. There are many factors that go into your mortgage rate. Keep reading for a step-by-step list of what to watch for as a homebuyer.

Mortgage Tips at a Glance:

1. Lower Debt-to-Income Ratio
2. Save for a Larger Down Payment
3. Review Credit Report
4. Shop Around for the Best Mortgage Rate
5. Avoid Big Ticket Purchases
6. Inquire About Rate Reductions
7. Don’t Make Major Financial Changes
8. Consider 15-Year FRM
9. Research Government-Backed Mortgages
10. Monitor the Mortgage Market

Here are 10 Tips for Getting the Best Mortgage Interest Rate

1. Lower Debt-to-Income Ratio
   Of course, eliminating your consumer debt, from credit cards to auto loans, would be the best thing you can do. However, when this is not a feasible solution, you can try to lower your debt-to-income ratio to bolster your financial appearance to mortgage lenders. Industry experts present various numbers, but below 36 percent should be the target.

2. Save for a Larger Down Payment
   How much do you have for a down payment? Indeed, saving for a home in today’s economic climate can be difficult. Additionally, increasing home prices have juiced the down payment percentage. That said, the rule of thumb should be approximately 15 to 20 percent of the total sales price. For instance, if the home you are interested in purchasing costs $400,000, you should aim for $60,000 to $80,000.

3. Review Credit Report
   Experts recommend checking your credit report and score every other year. If you have not reviewed it in a long time and are actively pursuing a home purchase, you will need to look at it immediately. This is also true of anyone else you are buying a home with. Oftentimes, there can be mistakes that you can rectify or pay a debt that you may have forgotten. As a result, you will see what your potential mortgage lender will see.

4. Shop Around for the Best Mortgage Rate
   Prospective homebuyers will exhaust every avenue when determining how to get the mortgage rate. However, the most straightforward tactic will be just to shop around. Indeed, understanding the question of “How do I find the best mortgage rate?” can be done by assessing the mortgage market landscape, viewing comparison websites, and calling the big banks to see if they can rate match a competitor.

5. Avoid Big Ticket Purchases
   Have you been eyeing that truck your colleague purchased? Interested in taking your family on a Disney vacation? What about that boat you think is a steal? Before buying a home and trying to receive the best home mortgage rate, you need to wait it out. In other words, it is imperative to avoid executing any big-ticket purchases.

6. Inquire About Rate Reductions
   Will mortgage lenders offer reductions? It all depends. Industry experts say that homebuyers should inquire about possible rate reductions since banks or private lenders might make concessions on specific circumstances, such as if you make a large one-time payment toward your principal.

7. Don’t Make Major Financial Changes
   If there were one thing that every real estate professional and banking expert would say not to do, it would be making dramatic changes to your life that impact your finances. This could include shifting jobs, filing for divorce, starting a business, or modifying your financial profile.

8. Consider 15-Year FRM
   The 30-year fixed-rate mortgage is what a majority of homeowners have. But what about the 15-year fixed-rate mortgage? The 15-year FRM is about 80 basis points between the 30-year alternative. A 15-year mortgage has other benefits, including less interest paid over time, home ownership achieved in half the time, and improved financial discipline since you have higher monthly payments. In addition, your family will have built equity in the home at a faster pace.

9. Research Government-Backed Mortgages
   The U.S. government has facilitated an environment of homeownership. While Washington has introduced recent schemes to address the housing affordability crisis facing typical Americans, the United States has various programs from the Federal Housing Agency, Veterans Affairs, and even the U.S. Department of Agriculture. They provide loans with competitive interest rates.

10. Monitor the Mortgage Market
    Can you time the market? It is a challenging skill to obtain. However, by monitoring the mortgage market and listening to various opinions from a diverse array of experts, you can obtain a sense of where the market is heading. For instance, the Federal Reserve has signaled fewer rate cuts this year, meaning that the benchmark 10-year yield, which mortgage rates tack, could stay above four percent for the rest of the year.

Final Thoughts About Getting the Best Mortgage Rate

How do I find the best mortgage rate? Prospective homebuyers starting their journey to ownership will always ask this question, with good reason. The answer demands due diligence, monitoring, and basic financial knowledge. When you’re ready to take teh next step o your ownership journey, REMAX will be there to help.