Getting a mortgage is one of the most important financial decisions you’ll ever make as a potential homeowner. Finding the best mortgage rate is even more important. A lower interest rate can save you thousands of dollars over the life of your loan, reduce the stress of your monthly mortgage payments, and free up money for other important financial priorities.
But with so many lenders and options out there, how do you know where to start your search for the best mortgage rate? Here are nine tips!
What’s the Current Mortgage Rate?
Mortgage rates fluctuate all the time, and they can vary by lender. The first step in getting the best mortgage rate is to know what the current rates are.
There are many ways to do this, such as talking to real estate experts from Boulder property management companies, doing your own research online, asking around, or simply calling up a few different lenders and asking for their current mortgage rates.
As of September 2022, the average APR for a fixed-rate mortgage is 6.468% with a 6.353% interest rate. If you’re interested in a 15-year fixed mortgage, the average APR is 5.644% with an interest rate of 4.441%.
Again, mortgage rates can vary wildly from lender to lender, so it’s important to compare rates from at least three different lenders or more before making a final decision.
You can also use online mortgage calculators to get a better idea of what your monthly mortgage payments would be and how much interest you would pay over the life of your loan.
6 Tips for Getting the Best Mortgage Payments
Regardless of the current mortgage interest rates, there are a few things you can do to ensure that you get the best deal on your mortgage and the lowest interest rate possible.
Keep the following in mind:
1. Shop around with multiple lenders to find the best mortgage rate.
Never settle for the first mortgage rate you’re offered – this is a surefire way to end up paying more than you need to. Instead, compare rates from multiple lenders to ensure you’re getting the best deal possible. Aside from giving you a better look at the current mortgage landscape, this will also give you more negotiating power when it comes to getting a lower interest rate.
2. Have a strong credit score.
Your credit score is one of the most important factors in determining your mortgage interest rate. The higher your credit score, the lower your interest rate will be. If you don’t have a strong credit score, now is the time to start working on improving it.
While rebuilding your credit score won’t happen overnight, there are some things you can do to give it a boost. One of the best things you can do is make all your credit card and loan payments on time – this will show lenders that you’re a reliable borrower.
You can also try to pay down your debts, which will also help improve your credit score. In general, the lower your debt-to-income ratio, the better.
3. Get pre-approved for a mortgage.
The process of getting pre-approved for a mortgage is fairly simple. You simply need to submit some financial information – like your income, debts, and assets – to your lender, who will then give you a letter that breaks down how much they’re willing to lend you.
This has a few key benefits. First, it shows sellers that you’re a serious buyer who is already approved for financing. This can give you an edge over other buyers who haven’t gone through the pre-approval process.
Second, being pre-approved lets you know how much home you can afford and gives you a better idea of what your monthly mortgage payments will be. This can help you stay within your budget when shopping for a home.
4. Get a fixed-rate mortgage.
Your interest rate will stay the same during the entire you’re paying off your loan when you get a fixed-rate mortgage. This can provide you with some necessary peace of mind, knowing that your monthly mortgage payments will never go up – no matter what happens with interest rates in the future.
If you’re worried about interest rates going up, getting a fixed-rate mortgage could be a good option for you. Just be aware that if interest rates do go down, you’ll be stuck with the same high interest rate – so it’s important to weigh your options carefully before deciding on a fixed-rate mortgage.
5. Pay points to lower your interest rate.
If you’re looking for a way to immediately lower your interest rate, you can do so by paying points. Points are a fee that you pay to your lender at closing, and each point is equal to 1% of your loan amount.
Paying points to lower your interest rate can be a good idea if you plan on staying in your home for a long time. The longer you keep your mortgage, the more you’ll save in interest. Just be sure to calculate the break-even point – the point at which you’ll have saved enough in interest to offset the cost of the points – before making a decision.
6. Get a shorter loan term.
While it may mean higher monthly payments, opting for a shorter loan term – such as a 15-year mortgage instead of a 30-year mortgage – can save you a lot of money in interest over the life of your loan.
With a shorter loan term, you’ll pay off your mortgage faster and you won’t have to worry about interest rates going up in the future. Plus, you’ll build equity in your home at a faster rate.
Wrapping It Up
Getting the best mortgage payments will take a lot of time, effort, and research on your part. Still, every minute will be worth it once you find the perfect home and get a mortgage rate you’re happy with. Good luck!