Finding a suitable home is ideally a daunting process. Furthermore, locating one that will fit in your budget is a time-consuming process. However, once you find a tasteful housing, comes the issue of financing the purchase. Banks and other money lending institutions come to scene in this instance. The issue at hand is to find a lender with the best mortgage rate. Mortgage rates are primarily dependent on the regulating body. Regardless of this, you as a home buyer need to find ways to lower the mortgage payment. In this article, there are four ways discussed to enable you land a lower mortgage payment for your dream home.
Putting in Place a Substantial Down Payment
Making a substantial down payment or in other words a large down payment saves your mortgage interest. Here is how – a large down payment implies that you will borrow less to complete the home purchase or to sear for house for rent in Bangalore or any other market. Therefore, the fees which are associated with the loan as a percentage will be reduced. To add on, the fees for the mortgage insurance premium will be consequently reduced. Of course, this will be dependent on the loan ceiling set by the funding institution. A large down payment in one institution may not be considered the same to another institution.
Ensure You have a High Credit Score
When you display having a high credit score, this means you have a good or excellent credit history dependent on the score. Credit score determines whether you will get a loan or not, not only the mortgage. Therefore, credit score is influential in helping a mortgage institution determine the rate on your home loan. The higher the credit score you have, the lower the interest rate on your home loan. Many methods can be implemented to ensure a high credit score. This is especially valid if you are looking to buy a home in the near future. Some of these include:
- Paying off your debts early enough.
- Avoid obtaining new credit cards that you will not make use of at any time.
- Always keeping low balances on your credit cards.
- Avoid closing credit cards that you have not used; it may be a strategy to increase your score, but not right.
Have a high credit score, while at the same time make a substantial down payment
This tip is a combination of the two above. This is an obvious option as the ramifications are awesome. Just think of how much you can save if you make a large down payment while at the same time have a high credit score. Though mortgage loan terms are different, many conventional lenders prefer a client having a huge down payment and a good credit score. You are often guaranteed of a lower mortgage payment with a high credit score and huge down payment.
Apply for a Mortgage Rate Lock to Get a Low Mortgage Rate for Your Home Purchase
A mortgage rate lock is typically an agreement between you – the borrower, and the lending institution. The agreement allows for you to lock in the interest rate at a given time with the present market interest rates at that time. The lending institution has the commitment to adhere to the terms of the agreement, so are you – the borrower. What happens is that you promise to close your loan at a given time and on the other hand the lending institution agrees to have the mortgage rate locked when that time comes. You, therefore, stand to gain when your close your loan in the time frame stipulated in the agreement or contract.
Knowing these vital tips can really smoothen your process of getting a home loan and paying it off without any hassles.