NAVIGATING INTEREST RATES
I’m often asked, “What’s a good interest rate for my mortgage?” and, “How will I know if I’m getting the best rate?” If you’re a buyer in today’s market, I have some great news for you: interest rates are still incredibly low.
Currently, mortgage rates average between the high 2% to 3.5% - significantly lower than just over one year ago. So how do you find the right mortgage rate? Below are strategies to help you find the right rate that works for your specific buying parameters.
A good mortgage rate will depend on several factors:
Strength of Your Finances: Lenders look at your credit score, down payment, existing debt and the consistency of your income. Each item is weighted differently and is used to calculate a final mathematical score, which reflects your ability to repay.
Choosing the Right Lender: Only by shopping around and getting rate quotes from several lenders can you be sure you’re getting the best possible deal.
Mortgage Type: Compare all loan options. Each type of mortgage comes with a different average rate: conventional, conforming, FHA, VA, USDA and jumbo loans.
Loan Term:The length of your loan makes a difference. Shorter-term loans (ex. 15-year mortgage) typically have lower interest rates than a 30-year loan.
Loan Purpose: It’s common to pay a slightly higher rate to refinance your existing loan vs. buying a home.
Strategies to get a lower interest rate:
Choose the type of mortgage that suits your needs best. Your loan officer can help you decide.
Shop around for the best deal
Compare your mortgage loan estimates carefully. Pay close attention to the APR and the total you will pay in the first five years of your loan.
Negotiate. Don’t be afraid to ask lenders for a better rate or lower fees.
Buy discount points if you can afford them.
Bottom line? The first step in a home purchase is to talk to a lender(s) & go prepared with a checklist of items needed for a mortgage loan application. They will be able to tell you how much you qualify for in a home loan. By doing so, they can help you determine your purchasing factors, and ensure that as you begin working with your REALTOR® (me!), the home buying process is smooth & successful!