How to Get the Best Mortgage Rate in 2019
Your mortgage rate will impact the amount you pay on your home monthly so it’s important to get the lowest interest rate possible. Mortgage rates are currently at a low of approximately 4%, the lowest they’ve been since January 2018. The recent drop, aligning with the spring market, makes it the perfect time to purchase a new home. Lowering your rate by a percentage point or two could save you thousands over the course of your loan. The average, national 30-year mortgage rate varies daily, but there are steps you can take to ensure you get the best rate on your home:
Increase Your Credit Score
One of the main criteria lenders use to determine your mortgage rate is your FICO score. Your credit score will determine if you qualify for a loan and the amount you’ll pay for it. Generally speaking, the higher your credit score, the lower your mortgage rate will be. Those with scores above 760 receive the best mortgage rate, lenders see them as less of a risk and unlikely to default on a loan. Increasing your credit score before applying could help you get a better rate and save money.
Put More Money Down
Generally, you’ll get a lower interest rate on your loan if you put more money down up front. To get the best rates, putting down 20% of the purchase price is ideal. Lenders will certainly accept a lower down payment, but any less than 20% and you’re looking at private mortgage insurance (PMI) which will add costs to your monthly home payment. Avoid this and get a better rate by putting at least 20% down on a new home.
Lower Your Debt
You can improve your chances of qualifying for a low-interest loan by lowering your debt to income ratio (DTI). Try not to allow your DTI to exceed 36%. Keeping it lower is even better. To lower your debt to income ratio, first, don’t take on any more debt. Avoid making large credit purchases when buying a home and pay off as much of your debt as possible before applying for a loan.
Have an Employment History
Lenders want to know that you have a stable job. In their eyes, you’re less of a risk than unemployed borrowers or those who rely on non-salaried income. Having at least two years of steady employment, especially from the same employer, will help in getting a better mortgage rate. Just got a new job? Don’t fret! You can still qualify for a low-interest loan. A steady salary is what matters most.
Shop with Multiple Lenders
Don’t put all your eggs in one basket! You’re more likely to get the mortgage rate you’re looking for by shopping around with a few lenders rather than just one. Don’t just settle for the financial institution you normally bank with. Do your research and compare rates with banks, credit unions and mortgage loaners.
Bottom line: a lower mortgage rate could save you a lot of money in the long run. Are you looking for a lender? We partner with the best in the business. Click here to learn how Shelter Home Mortgage can help you with your loan.