Find the Right Mortgage Product
There are many different mortgage products to choose from, and each product has a different set of rates. However, you shouldn’t choose a mortgage product just to get the lowest rate out there. You’ll want to make sure that the mortgage loan type meets your financial needs. Once you’ve decided on the best mortgage product, find the lender who can give you the best rate for that product.
Consider the Annual Percentage Rate
An annual percentage rate is the rate a borrower is charged each year after factoring in the interest rate, points associated with the rate, and the origination fees from the loan. In essence, the APR is a true reflection of what you are being charged to have your home. You can see what your APR will be on the “Truth in Lending” document. This is a document that your mortgage lender is federally required to provide you with. Compare the annual percentage rate between lenders and mortgage products to make sure you’re getting the best deal.
Have Credit in Good Standing
Your credit rating has a very big impact on your mortgage application. Most significantly, it can save you or cost you thousands of dollars over the life of the loan depending on the interest rate your credit score qualifies you for. Do everything you can to get your credit in good shape before applying for a mortgage to qualify for the lowest rate possible.
Save Up a Down Payment
Your down payment can also have an impact on your mortgage interest rate. The down payment will determine what your loan to value is. In many cases the lower the loan to value, the lower your interest rate will be. There are many unique ways that you can save for a down payment to put toward your home purchase.
Discuss Rate Locks With Your Mortgage Provider
Locking your interest rate can be a way for you to secure a lower rate. Each lender has different rate lock guidelines, so speak with them about the process. Ask about any fees that are associated with a rate lock and whether or not you’d be able to “re-lock” your rate if interest rates drop after you’re already locked in.
Pay Discount Points
Another way to secure lower mortgage interest rates is to buy down your rate with discount points. Discount points are a fee you pay to get a lower interest rate, they are typically a percentage of the mortgage. This can end up costing a few thousand dollars, but you can recoupe in the savings from having a lower interest rate. Speak with your mortgage professional about what your break even point would be to make sure you’ll be in the house long enough to see the savings.
Speak with your Mortgage Broker
Your mortgage broker is an invaluable asset to helping you find the best rate on a mortgage. They can educate you on what type of mortgage products can best suit your needs. They have access to a variety of lenders and can get you the best deals on interest rates. Call us at 973-638-2466 and we’d be happy to guide you in getting the best mortgage and interest rates available.