The day has finally arrived; it is finally time you bought a home!
And yet, you might not be fully ready.
An average home costs about $2,60,000 and more and of course, like many other normal Seattle citizens, you do not have that huge an amount piling up in your home or your savings account. You are going to have to borrow most of it from a financial institution or a bank and pay them back almost your entire life in a small yet decent amount.
This is where Mortgage Rate comes into the picture
Mortgage interest rates become a huge deal in multiple cases. When you lower your interest rates, even by a small percentage point, you are still able to save thousands of dollars of your hard earned money! All of this accumulating to a huge amount over the total duration of your loan.
So how do you ensure your mortgage rates are the best in your case? How do you make sure that you are not shelling off the excess of what you can afford?
Just follow the below-mentioned tips to get the best out of your mortgage rates.
1. Don’t forget to compare
When it comes to getting the best deal while shopping, you do not forget to visit multiple stores both online and offline! Why skip on your research when it comes to this big a deal?
You should take a proper insight before you actually delve into the process of finalising your mortgage company and rates. Compare all kinds of financial institutions, money lenders, brokers and bank rates to finalise the best rate for your future.
2. Invest in building up your credit score
While focussing their attention on getting a mortgage loan and saving up for a decent down payment for your future home, most people forget that what ultimately needs focus is their credit score. A decent credit score plays a huge role in your mortgage payments and mortgage availing process.
Your credit score determines your ability to qualify for a future mortgage. Moreover, it also determines the rate at which you will be paying your mortgage payments. An inverse relationship plays a key role here. The higher your credit score will be, the lower will be your rates and vice versa!
3. Your down payment
Making sure you get the most effective rates for your mortgage also depend on the total amount of down payment you are willing to shell out without taking a huge risk. Yes, a decent amount of risk does surround the situation, however, a potential risk zone where things look smooth for you in the years to come along with your ability to mitigate those risks provides you an opportunity for a decent and effective rate.
So, if you are putting in a pretty decent amount of down payment as your first investment towards your home, the rest of your interest payments are bound to get shrunk down. You will not be stuck with a high-interest rate for the rest of your life.
4. Term of loan
Financial institutions and money lenders are going to give you an effective interest rate only when they are sure of being able to mitigate their own set of risks involved. This, in a simpler language, means that your interest rates are going to be cut down significantly only when your loan term is shorter! Of course, a 20-year mortgage interest does not look as appealing as a 10-year term does. In a 20 year term, you are of course going to pay much higher interest as compared to the shorter counterparts.
5. Your employment and income stability
A steady income and employment ensure a smooth ride as far as interest rates are concerned. Of course, any financial institution or any Seattle Mortgage Company such as this one would prefer your loan application if you do have steady employment at least for the past two years. Anything even longer would be welcomed with open arms. You are bound to get a pretty decent interest rate and a smooth application process with that!
As far as people with a self-employing business are concerned, you will be required to fulfill certain criterion and present your IRS returns to prove your income stability. Once proved, you are good to go!
6. Opt for a Government-backed loan
Mortgage rates generally come down when there is an intervention of the Government. Mortgage terms provided by the Government authorities themselves are similar in almost everything, minus the heavy interest rates. The only difference here, the Government does not really believe in insuring them. This makes everything a tad bit risky! Lender, however, is guaranteed on getting his/her money back whenever any default is made on the part of the borrower.