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If you're ready to buy a home for the first time, everything can seem insurmountable. The mortgage process can be involved, but it isn't as complicated as it seems from the outside looking in. In fact, there are even some things that you can do to help improve your chances of getting the loan that you need with the interest rate that you want. Here are a few things to think about as you're shopping for that mortgage for your home.
Consider Adjustable Rate Options
If you're in a position where you can pay your mortgage down substantially in a short period, or if you expect to be able to pay it off sooner than the mortgage period details, you may want to consider discussing adjustable rates with your lender.
Adjustable rates allow for lower interest rates in the introductory period of the loan, which can save you significantly on interest during that introductory period compared to the rate you'd pay with a fixed rate. However, if you can't make a big difference in your mortgage balance during that introductory period, it's better to work with a fixed rate instead, because it eliminates the worry about an increase in your rate later.
When you have the cash on hand to pay extra to your lender at the closing, you may be able to secure a lower interest rate in exchange. For every percent of the mortgage balance you can pay in points to your lender, you might save as much as half of a percent in interest on your loan. Ask your lender about any possible points negotiation that may be available to help you save on the interest costs over the life of your mortgage.
Increase Your Savings
Mortgage lenders look at your financial security when they are estimating your creditworthiness, including the interest rate they are willing to offer you for your mortgage. That means that you need to show yourself as financially stable. Consider increasing your savings as much as possible before you apply for your loan. That way, you can show enough in savings to cover several months' worth of mortgage payments and bills. This will reflect well for your lender and can possibly secure you a better interest rate.
These are a few of the things that can help you with securing the lowest possible interest rate for your mortgage. The more you understand, the easier your mortgage negotiations will be. Talk to a financial professional for more help with home loan purchases.
Share27 January 2020
