3 Ways To Get The Lowest Mortgage Rate Possible

Posted on: 4 January 2019

There is more to buying a home than just finding the right property and putting in an offer. Becoming a homeowner is a major financial decision and it can be a huge responsibility. There are also plenty of advantages to owning your own home, including building equity. Chances are if you are looking to buy a home, you will want to finance it. There are a lot of things to consider when getting a mortgage, including the mortgage rate. The lower the mortgage rate, the less you will pay overall. Here are three ways to get the lowest mortgage rate possible. 

Improve Your Credit Score

If you are planning to buy a home in the near future but aren't looking to buy immediately, one way to get a lower mortgage rate is by taking steps to improve your credit score. A better credit score can have a huge impact. For example, the average mortgage rate for someone with a 620 credit score is 4.5 percent while the average mortgage rate for someone with a 740 credit score is 3.75 percent. While a .75 percent difference may not seem like much, it can mean paying tens of thousands of dollars in additional interest. A few ways to improve your credit score include paying all of your bills on time and using less than 30 percent of your available credit.

Put More Money Down

While it certainly is possible to obtain a mortgage without putting 20 percent down, there are a few benefits to putting down 20 percent or more when buying a home. First, you avoid having to pay for private mortgage insurance, something which can easily add a couple hundred dollars to your monthly payment. Second of all, lenders will typically offer lower mortgage rates to those who put 20 percent or more down.

Shop Around

Another way to get a lower interest rate on your mortgage is by shopping around. You may find that there is quite the range in terms of what interest rates certain lenders are offering. Shopping around can help you find the lowest rates available. You may also want to consider going with a shorter loan term. While this will mean a higher monthly payment, typically the mortgage rates are lower on shorter term loans saving you money on interest.

If you are buying a home, it's important to remember that a lower mortgage rate will save you thousands of dollars in the long run. For this reason getting the lowest mortgage rate possible should be a priority. A few things that can help you get the lowest mortgage rate possible include improving your credit score, putting more money down, and shopping around with various lenders.