When shopping for a new home, there’s a lot on your mind. While your number one goal is to find the property that best suits your needs, there’s an important question to answer: what’s the best way to find the lowest possible interest rate?
Neglecting to shop around can cost you thousands of dollars in the long run – and that’s not a risk you should be willing to take.
Fortunately, there’s nothing difficult about finding the best mortgage rate. It comes down to taking your time, knowing what you want, and making a few key decisions along the way.
Here are some tips that’ll work in your favor:
1. Review Your Credit History and Score
Lenders consider a variety of factors when deciding what type of rate to offer you. Your credit history and credit score are at the top of that list.
If you have excellent credit, you’re in good position to score the lowest possible rate. Conversely, if your credit history and score leave something to be desired, you may find yourself with a rate that is a touch higher.
Tip: once you review your history and score, make note of any changes you can make before applying for a mortgage. For example, you may be able to pay down some credit card debt, which can result in a lower rate.
2. Consider Every Mortgage Product
There is more than one type of mortgage product, with fixed-rate and adjustable-rate loans the most common.
With a fixed-rate loan, your interest rate and payment remains the same from month to month. This is ideal from a budgeting perspective.
With an adjustable-rate mortgage, your rate has the potential to rise and/or fall over the course of your loan. Maybe you’ll win, but maybe you’ll lose. You must decide if you’re willing to take the risk.
Also, consider the term of your mortgage. Typically, the shorter the term the lower the interest rate. So, if you can afford a 20-year mortgage, as opposed to a 30-year term, consider it.
3. Shop Around
Don’t assume that one lender and mortgage product is as good as the next. Yes, you want to get your financing lined up. And yes, you want to spend most your time on the home that you’re actually buying. But if you don’t shop around, you could cost yourself in the long run.
There’s no excuse for avoiding this in today’s world, as you can efficiently and quickly get in touch with lenders online. You can also consult with an online or local broker who can assist with the process.
Even though it’ll take some time out of your schedule, it’s a must that you shop for the best possible mortgage rate.
By doing this, you position yourself to save big money over the course of your loan. And it’s safe to say that that’s something you want to do!