Buying a new home is one of the biggest steps that a person can take. Prior to taking out a home loan, you want to ensure that you get the best interest rate for your mortgage. The lower your rate is, the less you’ll pay over the long run. In today’s blog post we’ll share three key tips that will help you get the best possible mortgage rate.
Tip 1: Look For Special Programs
The Federal Housing Administration, better known as the FHA, offers a program designed for those looking at buying homes. This program lets applicants apply for loans and get access to better interest rates. The FHA guarantees that loan and agrees to pay off the funds if the borrower defaults.
The USDA can also help those interested in purchasing homes in rural areas. This can include farmland, ranches and homes located in smaller towns across the country. The USDA developed this program as a way to increase the population in certain areas.
Other programs are available through HUD, especially for those who never owned a home before. HUD is intended to help new homeowners buy homes in underdeveloped and up-and-coming areas. There are also special programs open for those who work as teachers, firefighters and in other positions that help the community at large.
Not requesting quotes is one of the biggest mistakes that new shoppers make. Did you know that your interest rate can drop by a few percentage points or more just by comparison shopping? Lenders use different criteria when determining who can borrow money and the amount charged, and comparing those quotes ensures that you get the best price.
Many individuals think that applying for multiple loans will hurt their credit scores. Note that requesting quotes from top lenders is different than applying for loans and won’t harm your credit or FICO score.
Improve Credit Before Applying
Speaking of credit, one of the biggest factors that determines your interest rate is your credit score. A higher credit score of 700 or higher will get you a better interest rate than if you had a score of 650 or less. Improving your score before applying is one of the best ways to get a good rate.
Paying down your debt is an easy way to improve your score, but you can also pay your bills on time to get a better score.