As mortgage rates continue to rise, they have reached their highest point since 2009. Whether you are buying a home or have already bought a home, the interest rate on your mortgage can significantly affect how much you pay for your house.
Learning how to get a lower interest rate on a mortgage can be simple and can save you tens of thousands of dollars over the course of your loan!
Do you want to learn how to get a low interest rate on a mortgage? Keep reading this guide for the top tips to negotiate a mortgage that works for you.
Keep a Good Credit Score
One of the easiest ways you can get a low interest rate on a mortgage when you buy a home is by keeping a good credit score. This is a beneficial tip no matter what type of mortgage loan you are taking out.
Every lender will look at your credit score and will determine your trustworthiness as a borrower. If you have a high score, they will trust you to repay your loan. Because it is not as risky to lend to you, you can get a lower interest rate.
To increase your credit score, you can improve your payment history, credit utilization, credit mix, and more.
Get a Fixed Rate Mortgage
Something else you should consider when getting a mortgage is whether you want fixed-rate mortgage loans or adjustable-rate mortgage loans. There are pros and cons to each, but it might be more beneficial to get a fixed-rate mortgage to lower your interest rates.
For example, adjustable-rate mortgages often advertise lower interest rates for the first few years of the loan. However, the interest rate can jump and may be unpredictable.
If the market is good and you are able to lock in a low interest rate, getting a fixed-rate mortgage can save you a lot of money. Plus, it will provide you with peace of mind knowing that your rates will not change over the years.
Shop Around for Great Rates
While many people shop around for a good deal on a new purchase, they may not realize that you can also shop around for great interest rates on a mortgage loan.
This is one of the smartest things you can do to save money on your mortgage costs. Many banks will provide their mortgage costs online, so you can compare the cost between several different lenders.
Often, you can find lower mortgage rates when you go to a credit union rather than a bank.
Make a Larger Down Payment
Making a larger down payment can also help you lower your mortgage rates. Because homes are still climbing in price, it is more difficult for banks and credit unions to give you the financing for your home.
Larger loans have more risk associated with your lender, so they will also typically have a higher interest rate.
If you make a larger down payment on your home, you will not have to borrow as much money from the bank. This can help you lower the risk for your lender so they can offer a better interest rate for your mortgage.
Negotiate With Your Bank
Something else that many people don’t know is that you can negotiate when it comes to your mortgage interest rate! While it may seem nerve-wracking to ask your bank to lower your rates, the worst thing that could happen is that they say no.
However, many lenders will do what they can to keep your business with their company, so they may be willing to lower your rates!
This is especially common for people with great credit! You can shop around for a better price and then ask your current lender to match their competitor’s interest rate that matches the quality of your credit score.
Shorten Your Loan
Shortening your loan is another simple way to get a lower interest rate. This is because financial institutions want to get their money repaid as quickly as possible! It is less risky for a lender to let you borrow money for a shorter amount of time.
If you can, taking out a 15-year mortgage instead of a 30-year mortgage can result in a lower interest rate.
This will also help you build equity in your home faster than with a longer mortgage. Still, you must make sure that you are able to comfortably make your mortgage payments and that you will not experience any financial difficulties.
Refinance Your Mortgage
Finally, you can try getting a lower interest rate on your mortgage by refinancing your loan. This is especially beneficial for current homeowners who may have gotten locked in at a higher interest rate and find that the rates are now lower.
Refinancing your mortgage allows you to lower your monthly payments, save money on interest, and even pay off your loan sooner.
If you are interested in refinancing your mortgage, our team can provide you with a refinance audit to help you find the right type of loan for your needs.
Learn How to Get a Lower Interest Rate on a Mortgage
Getting low interest rates on mortgages can help you save money when buying a home. Following each of these tips can help you lock in a competitive rate when you buy a home!
Do you need help learning how to get a lower interest rate on a mortgage? Society Mortgage can help! We provide the financing for people to purchase their homes and can help you lower your interest rate with our refinancing program.
Contact us today to learn more about our refinancing services and to start saving money!