For most people buying a house means getting a mortgage. And that means shopping around to get the best deal on a mortgage possible.
Looking for deals on things like cars, appliances, etc. can save you hundreds of dollars. Maybe thousands if you’re lucky.
But getting a great deal on a mortgage can save you tens of thousands of dollars over the course of the loan. So let’s dig in and look at how to find the best fixed rate mortgage deals.
How To Find the Best Fixed Rate Mortgage Deals
Shop Around
Yeah. Seems obvious. But it’s the most important thing you can do.
Don’t just shop around online. Call local mortgage lenders in your area to see what deals they offer.
And, remember, the loan with the lowest interest rate may not be the best deal. Compare points, fees, terms and more to make sure there aren’t any hidden costs that could add up over time.
Try To Get a Prime Rate Mortgage
Prime mortgages go to prime borrowers. These are people who lenders consider to be less risky. Prime borrowers usually have to have at least a 670 credit score. They will also need to put down at least a 10% to 20% on the home.
Because these borrowers are less risky, they tend to get the lowest interest rates on their mortgages.
Tips On How To Get the Best Mortgage Rates
Mortgage rates are important. If you’re shopping for a fixed rate mortgage, the lower the rate you can get, the more you’ll save over time.
So here are some tips on ways to get the lowest rates.
Boost Your Credit Score
In general, the higher your credit score, the higher the likelihood of getting lower interest rates on your mortgage.
So take some time to get your finances in order and raise your credit score. This is so important, it may even make sense to hold off on buying a new home until you improve your credit score.
Have Steady Employment
Lenders don’t like risk. And if you change jobs frequently or have been out of a job recently, they see that as a risk.
The more stable your employment history, the better off you’ll be here. If at all possible, try to show at least 2 years of steady employment before applying for your mortgage. If it’s with the same employer, even better.
Put Down a Big Down Payment
If you can put down a big down payment on a home, it can help you get a lower mortgage rate. Here, you want to aim for a 20% down payment.
If you put down less than that, lenders may make you take out private mortgage insurance (PMI). This can be between 0.05 to 1.00 percent of the loan amount each year.
Choose a Shorter Term Loan
For a fixed rate mortgage, choosing a shorter term can get you a lower rate. A 15 year fixed rate mortgage will have a lower interest rate than a 30 year fixed rate mortgage, all else being equal.
Pay Down Your Debt
Lenders look at your debt-to-income ratio when assessing your mortgage application. The less debt you have, you should be able to get better rates.
Lock In Your Rate
If you find a low rate that you’re happy with from a lender you like, lock it in. That will make sure that rates don’t rise before you close on your home.