Trying to find a mortgage loan with the lowest interest rate possible along with low closing costs and fees can save you quite a few thousand dollars. What it takes is some good planning and a bit of knowledge about the process required on the application. There are many things you can do to get the lowest and best mortgage rate possible.
Credit Report – One of the most important factors in achieving a low mortgage interest rate is by having an excellent credit score. People who want to borrow money for a mortgage and have a credit score that is higher than 760 will get the best rates available. Check your credit score rating before you go to check out mortgage rates and it if it’s not above 760, see what you can do to repair that number or change it. Obtain a copy of your credit report from the three reporting agencies and check for outdated information or incorrect information about your payment history or credit that may be lowering your number. All three credit reports will have information on them as to how you can make corrections for errors on the report. You want to be sure to check this well in advance of trying to obtain a mortgage loan.
Pay Down Rate – When looking at mortgage rates, you may want to consider paying discount points. What you are essentially doing here is paying some more money upfront so that you can have a much lower mortgage rate for the rest of the loan period. One point would cost you 1 percent of your Melbourne home loans. Say you need to borrow $200,000 for your mortgage. 1 percent of that would be $2,000, so the point lower in interest rate would in essence cost you $2,000. For every point you buy, up to ¼ of a percentage can be sliced off your mortgage rate which can make a huge difference in the long run. Now, that being said, buying down would really only make sense if you intend to stay in the home for a long time, or if you have extra money lying around. For example, say you borrow $250,000. You pay $2,500 in addition up front and your rate could be lowered from 4% to 3.75% which is going to save you approximately $40 a month. You will own the home in a shorter amount of time as well.
Loan Modification – If you currently own a home and want to try to have your interest rate lowered but not add or change the length of your loan, a loan modification may be what gives you the best deal. A loan modification is the cheapest way to refinance a loan as well as a quick process. In most cases, the overall cost won’t exceed $500. With a loan modification, the lender is basically agreeing that they will bring your interest rate down to a lower rate for the remainder of your loan period.
Finding the best mortgage rate can seem confusing, but with some shopping around and doing a bit of research, you can probably find something that is more economical for you. With the many mortgage brokers out there today, compare and find the one that will give you the lowest and best interest rate possible.