Looking for creative ways to lower your mortgage rate? Take a look at these 7 methods that you should implement. Whether you have a current mortgage, looking to refinance your mortgage, or simply looking to secure your first mortgage, you’ll want to review these 7 methods.
#1 Maintain A Good Credit Score
The foundation of a low mortgage rate begins with keeping your credit score as high as possible. Lenders look at your credit score as a roadmap to your creditworthiness. A high score could alleviate worries that you’ll eventually repay your loan, while a low score could entice lenders to charge you a higher mortgage rate, or not lend to you at all.
#2 Work History Is Consistent
On top of a good credit score, lenders also want to see a consistent and long-tenured work history. If you’ve been working at the same place for many years and have consistent or growing annual income, lenders will be more likely to give you a home loan with an attractive rate.
#3 Shop Around
One of the smartest moves prospective homebuyers can make is to shop around for the best mortgage rate possible. Shopping around is a lot easier today than it was just 20 years ago thanks to the advent of the internet.
#4 Ask Your Lender
How’s this for groundbreaking advice: Ask your bank to lower your rate. There are far worse things you’ll be told in life than “No,” but that’s the worst possible answer you’ll hear in this instance.
#5 Shorter Loan Term
Another keen way to lower your mortgage rate is to consider shortening the length of your loan. The 30-year mortgage is traditionally how Americans purchase a home. However, financial institutions incentivize homebuyers who repay their home loans more quickly.
#6 Pay For Points
Eighth, prospective homeowners may opt to pay for points. Points are an upfront fee paid by homebuyers to lower their mortgage rates. Each point is equal to 1% of the value of the loan, and paying a point typically lowers your ongoing interest rate by 0.125%. For instance, paying a point on a $250,000 loan would cost an extra $2,500, but it would reduce your interest rate by 0.125% over the life of the loan.
#7 Auto Payments
Sometimes, the simplest things can save you money. While you’ll want to check with your financial institution to see if this is offered, setting up an automatic mortgage payment that ensures you’re never late can result in your bank offering a lower ongoing interest rate.