|Get a Rate Quote|
Once you determine which type of mortgage rate you want, it’s time to start shopping. Instead of shopping for a home and then applying for a mortgage, try reversing the order – talk to a few mortgage professionals for some advice on your qualifications, and then get pre-qualified for a loan or, even better, get pre-approved. If you have your mortgage in hand, you will be in a stronger negotiating position with the seller, because he will know that no financing contingencies will be required. Also, if mortgage rates are favorable, it will allow you to act quickly to lock in a preferred rate once you find the property that you would like to buy.
To get the best mortgage rate available, you’ll want to show the bank that you are credit-worthy by having the best credit score possible. That’s why it’s imperative to check your credit report before you begin applying for a mortgage. Banks use credit scores to determine whether you’re a good risk, and if you’ll be someone who makes mortgage payments on time. If you have a pattern of paying your bills promptly, you’ll be in a great position, but that’s not something you can establish overnight. If you have a low credit score, there’s a higher risk that you’ll miss payments or, even worse, default on the loan completely.
Once you get a copy of your credit report, review it carefully for any errors. If you find them, contact the credit reporting agency and have it corrected as quickly as possible. If you can’t do that in time for your application, you can always let the bank know that there’s an error and you’re in the process of correcting it.
Another way to get the lowest mortgage rate available is to increase your down payment. Most lenders now require that you put 20 percent down, but if you can pay more upfront, it will lower the amount of mortgage you need to take, and may also lower your loan’s rate.
Ask your lender if you qualify for a loan that is backed by Fannie Mae or the FHA, because these generally carry the lowest interest rates. You may also be eligible for a Veteran’s Administration loan if you served in the military.