6 Steps to Get a Low Mortgage Rate
Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage–whether it’s a home purchase, a refinancing, or a home equity loan–is a product, just like a car, so the price and terms may be negotiable.
Despite the number of potential lenders available to offer financing for your house, obtaining a low mortgage rate for your house may not be as easy as you think it is. Since your mortgage payment is likely to be one of your biggest expenses in your monthly budget, there are a few points that one must know to secure that low mortgage rate.
Step # 1: Know the Current Market & the Base Rates
It is important to know the current mortgage market. If there is a lot of lending going on and chances are that as the banks are business hungry they will be willing to go to the bare minimum to get your business. If the market is tight and there is very little lending going on, that means that banks are being cautious in giving out money and will try and push business away with higher interest rates.
Step # 2: Determine Your Needs
The length of the loan can play a major role on the interest rate the bank may be willing to offer you. Bear in mind that the monthly payment figure may look lower on a longer period of loan, but at the end of the day you are not only paying bank more money but also paying it back at a higher interest rate. The amount of down payment or equity as it more commonly known can also play a part in determining what your mortgage rate will be.
Step # 3: Know Your Credit Issues
All loans are subject to a credit check. If you have had problems with your credit history, lenders may consider you a high-risk borrower and may charge you a higher interest rate. You can offset this by providing details of your financial records and supporting documents of your financial position and credit worthiness.
Step # 4: Compare Your Options
Obtain written quotations from various financial institutions that you have identified. Remember that you can still negotiate on the best offers.
Step # 5: Use of Mortgage Broker (Optional)
Mortgage brokers are professionals that negotiate with the lenders on your behalf for the best home equity loan rates. They usually charge a fee for their services but can influence the mortgage rate at the end of the day.
Step # 6: Complete the Application
Once you have compared your options, and chosen the best mortgage rate, just fill out the mortgage application, provide the necessary paperwork, and await the approval.