How to Get the Best Mortgage Rate: 4 Top Tips

While the rule of thumb is that you should never pay more than 30% of your income on housing costs, budgets vary for everyone. Getting a good mortgage rate can lower your costs and also the pressure you feel as you struggle to save and increase your earnings.

If you’re in the market for a loan, learning a few tricks can help you in how to get the best mortgage rate.

Follow these 4 tips to ensure that you get a mortgage that fits your budget and can put you in the home of your dreams.

  1. A Big Down Payment

One of the best ways to get a low mortgage rate is to have a low mortgage. Getting a low mortgage on your dream home can be made easier by decreasing the amount of money you need to borrow.

Saving up for years in advance will prepare you to put down a big down payment. That will lower the amount of interest that will accrue as well. Think of every dollar you save as having an extra 4% to 5% attached to it. If you can put $100,000 down as a payment, you’ll be adding an extra $5,000 to your savings by not having to take out a mortgage for that amount.

Pay attention to the “for sale” market to understand what could be in your budget.

  1. Watch Your Credit Score

Keeping an eye on your credit score is important to figure out when is the right time to buy a house. Checking your credit should be as common as getting a physical but unfortunately, it’s not.

You’re entitled to a complete copy of your credit score every year. There are several agencies that can offer it to you for free. Read through it carefully when you receive it.

If you have a common name, look for charges or debt that is connected to your account which shouldn’t be. Pay off anything in collections and make sure you eliminate any incorrect charges before you present yourself to a lender.

  1. Consolidate Existing Debt

Think of this as if you were tidying up your home before a big party. Consolidating your debt could allow you to get high-interest rate debt grouped with lower-rate debt, lowering the amount you’ll pay over time.

By consolidating debt, you could end up paying just one payment every month that is lower than the combined debt you’re currently paying.

  1. Compare Interest Rates

Recently, standard interest rates went up in response to the strength of the housing market and an improved economy. Rates change all throughout the year and can have a major impact on home prices. If you feel like the economy is headed for a recession, wait until prices drop before you buy in on a home.

Your Income Determines How To Get The Best Mortgage Rate

When you’re weighing out how to get the best mortgage rate, the amount of money you have access to plays a big role. If you’d prefer to pay for retirement and find that the costs of buying in your area might exceed your costs, you could forego buying and rent instead.

Follow our guide to finding the best places to rent in your area if owning a home isn’t in the cards right now.

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