A mortgage rate refers to the rate of interest that is charged on a mortgage. Determined by the lender, a mortgage rate can be either fixed, remaining the same for the term of the mortgage, or variable, fluctuating with a standard interest rate. If the mortgage rate is higher than you have to pay more over the life of the loan. And so, every home buyer wants to get the lowest mortgage rate.But how to get the lowest mortgage rates in Houston? Well, there are several things that you can do to ensure the lowest rates possible. Here are a few for you.
- Enhance your credit score
The lowest mortgage rates are provided to the ones, who come with the best credit scores – the thing is as simple as that. Generally, a credit score of 720 or more than that is considered to be “excellent” and you will need it to qualify for the best mortgage rates that every homebuyer wants to get. If you want to get the lowest mortgage rate but your credit score is not a good one, then you should look for ways to boost your credit score. It means paying off consumer debts in order to lower your credit utilisation, getting a credit card and using it properly to insert some reporting history and meat to your credit report, or cleaning up old accounts in default.
- Save for a big down payment
If you are looking for another option to ensure the best interest rate for your home loan program, saving up a large down payment can help you in the long run. Mortgage lenders like a big down payment. It is because this means you are not as big of a risk to them if you default on the loan – so they will typically reward a full down payment with better interest rates. A heavy down payment not only helps you to qualify for the lowest rates and best mortgage terms available, but also helps to avoid paying PMI, or private mortgage insurance. By saving up for at least 20% of the price of the home for your down payment as well as avoiding PMI, you can save around 1% of the total amount of your mortgage.
- Shop around
While you may be partial to a particular lender, it is always better to shop around to find the best mortgage and the interest rate. Based on the mortgage lender you will choose, the mortgage rate will vary drastically. Start the process by checking with your local mortgage lender, then other lenders in the market. You can also ask for quotes online. Compare the rates that you received from various lenders and go for one, who offers you the lowest price for the home loan program.
A lot of factors come into consideration when it comes to qualifying for and securing the lowest mortgage rate for your home loan program. Most of the important ones are mentioned above, consider these, and when in doubt, contact a qualified expert for help.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.