Buying a home may be the most expensive purchase that you make in your lifetime. The prices of homes are so high that few people are able to purchase the home that they want without securing some type of financing. To reduce the amount of money that you will ultimately pay to purchase your home, you will want to find the best mortgage rate you can get with your financial history. Here are some tips that you can use that will help you get the best mortgage rates available when buying a home.
Increase Your Credit Score Before Applying
Your credit score will be used to determine the interest rate that you are charged for the mortgage loan you are pursuing. The higher your credit score, the lower the interest rate you will be charged, which could save you thousands of dollars over the life of the loan. There are many ways to give your credit score a boost before buying a home. The best ways are paying down credit card balances, increasing your available credit, and removing any errors on your credit report that could be dragging your credit score down. You should also avoid applying for other credit products in the months before applying for a mortgage loan. Taking these steps could boost your credit score into the next highest category, reducing the interest rate you must pay considerably.
Obtain Several Quotes Before Choosing
Lenders have the power to set their own terms for the loans that they issue, so you may be able to find a better deal by shopping around. You can of course do a mortgage refinance later on but you never know how rates will go up and down so it’s best to do a lot of research beforehand. Before committing to buying a home, obtain quotes from several different lenders using basic information about your income and the home you would like to buy. This will allow you to compare the offerings of each lender side by side and see which ones are making the best offers. You may also be able to get prequalified for the amount that you would like to borrow, increasing your standing with realtors and sellers as a serious buyer.
Review Fees Carefully
It is very important to pay attention to the fees that are going to be charged for obtaining the loan as well as the fees you will pay when you buy the home. These fees can total thousands of dollars. With these fees, you typically have two choices. You can commit a large chunk of the money you were going to use to furnish the home to paying the fees or you can roll the fees into the principal of the loan to pay them off over time, but you will pay interest on the fees throughout the life of the loan. Make sure that you know what the fees will be and have a plan for paying them before signing any paperwork.