How To Get A Better Mortgage Rate: 7 Tips That Will Help and

Refinancing your mortgage might be a wonderful way to reduce your monthly payments and perhaps even shorten the term of your loan.

The Importance of a Good Mortgage Rate

Lower mortgage rates save you money over the life of your loan. Freddie Mac says a 1% difference in your mortgage rate can save you $40,000 over 30 years on a $200,000 loan.

But how can you reduce your mortgage rate? Although there isn’t a single solution that applies to everyone, there are steps you can take to improve your chances of receiving a reduced interest rate. Here are three tips:

1. Understand the different types of mortgage rates.

    

   The two types of mortgage rates are fixed and adjustable. Fixed rates stay the same for the life of your loan, whereas adjustable rates alter.

    

   Fixed rates typically cost more than adjustable rates because they provide more stability. However, depending on your circumstances, a fixed-rate loan can still be the best choice for you. So don’t instantly count it out.

2. Shop around for the best rate.

    

   Compare rates from different lenders before choosing one. Compare loans with similar terms (such as 15-year vs. 30-year mortgages) to fully compare them.

3. Know

You Can Get A Better Mortgage Rate With These 7 Tips

Loan rates are at historic lows. Refinancing or buying a new house is cheaper than it’s been in years, but be wise about it. These tips can help you get a better mortgage rate:

1. Check Your Credit Score

    

   The credit score affects the mortgage rate. The higher score, the lower the rate. Before applying for a mortgage, improve your credit score.

2. Shop Around

    

   Don’t just go with the first mortgage lender you talk to. Get quotes from several different lenders and compare interest rates and fees. You may be surprised at how much rates can vary from one lender to another.

3. Consider an Adjustable-Rate Mortgage

    

   If you’re not planning on staying in your home for more than a few years, an adjustable-rate mortgage (ARM) could be a good option for you. ARMs typically start out with lower interest rates than fixed-rate mortgages, but they can increase over time if market rates rise.

4.  Make A Large Down Payment

    

   A significant down payment will lower your interest rate. Larger down payments make borrowers less risky, therefore lenders frequently give better rates.

5. Get pre-approved for a loan

   
   

   This can give you leverage when negotiating with lenders.

6. Shorten your Loan

   
   

   Shorter loan terms entail larger monthly payments, but less interest overall.

7. Ask about Discounts and Special Programs

   
   

   Some lenders offer discounts or special programs for certain groups of people, such as first-time homebuyers or military members.

Better mortgage rates are achievable, but not easy. This article’s tips can save you thousands over the life of your loan. Compare offers from multiple lenders and improve your credit score before applying for a loan. This will give you an edge when bargaining for a better mortgage rate.