Tips For Getting The Best Mortgage Rate
We’ve successfully refinanced our home mortgage, and are now paying over $300 less per month on our loan, and trust me… that really helps ease our monthly financial burden these days. So we thought our readers might benefit from some tips for getting the best mortgage rate for their new home. Because, let’s face it, unless you’re out there getting ready to finance a 2015 Ferrari LaFerrar (which, incidentally, is the most expensive car out there, listing at a cool $1,416,362.00 according to AutoBytel.com), the biggest cost that most consumers like you or I are most likely to face in our lifetime is the cost of owning a home.
Individuals who are able to afford a house say this is the biggest investment of their lives and also their largest debt – I know it is for me and my husband at the moment. Considering the number of years a consumer will spend paying off mortgage, it is sensible to spend a sizable amount of time researching mortgage rates and learning how to secure the best deal.
Tips for Getting the Best Mortgage Rate
Banks and lenders are like any other company: they want your business and they are willing to compete for it. Their interest rates are not fixed but flexible, although a general range of interest rates is set by the economic climate of a time.
We found that we spent a good month learning about interest rates. So, prepare to spend many days, weeks, even months finding out what the interest rates are between various companies. Your own bank might not be able to compete with an independent broker. Various banks usually offer different rates. Don’t be afraid to look beyond the people you ordinarily do business with. Let each institution know you have been doing your homework and see what they can offer you in terms of a competitive interest rate and other loan features.
Use Your Account as Leverage
Maybe you already keep a fair amount of your money with a particular bank. Use that as leverage to get the best rate. Consider changing banks so that your mortgage and bank accounts are with the same institution if you are not opting to sign on with an independent lender. Your bank is likely to negotiate interest rates and other contract features to keep you.
Look Beyond the Interest Rate
A rate of interest is only one factor in what makes mortgage terms appealing enough to snatch up. There are other factors such as the cost of setting up the account, annual fees, penalties for late payments, and penalties for early repayment. It might sound like a fantasy but there could come a time when you feel it is possible to pay off the mortgage early or pay a lump sum to reduce your monthly terms and mortgage duration. Some contracts state that there will be an extra cost for being financially forward in this way because the lender is losing your interest repayments. That’s where lenders make their money after all. Look for no-penalty clauses, including ones which let you off the hook on late repayments every so often just in case you ever suffer financial difficulty. Personally, there is NO penalty for us if (or should I say WHEN) we can pay off our loan early, and in full! 🙂 That’s our goal, anyway.
Use your Credit Rating
The mortgage lender you deal with will have access to your credit rating, so think about the future. How can you establish a good credit rating? If you do not have a credit card yet, get one a year or more before buying your home. Always pay off the balance on time without anything left over. If the landlord is paying your utility bills, ask to have them transferred to your name and change the terms of rent so you pay them yourself. It looks very good if you always pay the gas and electricity companies on time.
If, by the way, you have some negative marks on your credit, there are ways that you can clean it up. For example, you may have paid a bill late 5 years ago, but the mark may still be on your report. Contact the people at the credit bureaus for starters.
Here is a United States governmental resource to help you on your way: Consumer Financial Protection Bureau