Worried About Mortgage Rates? What To Know
If you are worried about paying too much money in interest on your mortgage, there are some important things you can do to try to lower your mortgage interest rate. There are a lot of factors that will dictate what your rate is, like what lender you choose and what your current credit history looks like. Here are a couple of things you can do to get the mortgage rate down.
Eliminate Private Mortgage Insurance
Private mortgage insurance, also known as PMI, is a fee you have to pay if you don't put 20 percent down on the loan. This can add a hefty amount to your monthly mortgage, depending on the mortgage lender you choose and the rate for the insurance. Try to avoid this extra cost by putting 20 percent down at closing or by paying off as much as you can beyond your monthly payments until you have 20 percent equity in the home.
Improve Your Credit Score
There are several ways you can boost your credit score before you close on the mortgage, which can help you get a lowered rate. Try the following:
- Pay down debt
- Have three open lines of credit
- Have blemishes removed from your credit report
You may want to consult a credit specialist at your financial institution to see how you can try to get some quick points to boost your score. To get the lowest rate possible, you need to have the best score possible, and you may want to look for FHA loans if you are a first time home buyer.
Consult a Broker
You may not know what banks are the best to use, who has the lowest interest rates, or what type of rate you should get with the type of credit score you have. Meet with a mortgage broker to discuss what lenders you haven't explored and what type of interest rate you want before you agree to any home loan.
If you have had some credit issues in the past and you don't have a great credit score, you may not be able to get an ideal rate. When you get the mortgage, you want to be sure you make your payments on time, and then from there your credit score will rise. After you've improved your credit, you can refinance the mortgage and get a lower mortgage interest rate to save money in the long run.