Mortgage rates are rising, putting pressure on home buyers’ budgets. But there are ways to beat the rising interest rates as a home buyer. If you’re looking to lower your mortgage rate, there are a few ways to do it. A few of the best strategies include:
If you have good credit and know interest rates are rising, now could be an excellent time to buy.
A good credit score will help you get a lower interest rate on your mortgage. So try to improve your score before applying for a mortgage.
Using a shorter loan term
If you plan to stay in a home for less than 30 years, a 15-year mortgage might be an option. A 15-year loan typically comes with an interest rate of 0.5% to 0.75% lower than comparable 30-year rates.
A shorter-term loan means you’ll pay less interest over the life of the loan, which means you can build equity in your home faster. And because these loans have higher monthly payments, you must make sure you can comfortably afford them before committing.
Making a bigger down payment
The more money you can put down, the better. Not only do bigger down payments improve your credit score and interest rate, but they also reduce your monthly payment by lowering the loan value.
Before shopping for a mortgage, check with the lender how long quotes are locked in.
Before shopping for a mortgage, check with the lender how long quotes are locked in. Quotes can change over time. When you get a mortgage, shopping for the best combination of interest rates, terms, and costs is often smart. Lenders often give you the same rate for 15 or 45 days, but they usually jack up their rates after 60 days.
Working with a mortgage broker
Mortgage brokers help people find the best interest rates on loans. Mortgage brokers are paid on commission and incentivized to work hard for their clients. In addition, they can help you get a better deal by negotiating with lenders and getting extra perks thrown into your loan package.
Understanding how interest rates work is important if you plan to buy a house next year
Understanding how interest rates work is crucial if you plan to buy a house next year. Interest rates are rising, so it’s even more critical to get the best deal on a mortgage and lock in your rate before it increases.
Bottom Line
Working with a real estate expert can help you find the right mortgage. An experienced, knowledgeable real estate professional who owns many properties and has transacted numerous real estate sales will be able to offer you advice tailored to your situation.