5 Tips for Getting the Best Home Loan Rates
Getting a home loan can be a confusing process, with a slew of rates to consider and options to evaluate. Thankfully, following some simple tips can ensure you get the best rate on your home loan.
1. Get Your Finances in Order
Before even beginning the home loan process, make sure you’ve got your financial house in order. This means having all the needed documents like W2s, pay stubs, and bank statements ready. Additionally, build up your credit score as much as possible, as having a higher score can prove to lenders you’re a reliable borrower.
2. Shop Around
You’ll also want to shop around for home loan rates before committing to one. You may be able to get a better rate at one lender than another, and all it takes is a few phone calls or some internet research to figure that out. Similarly, consider the terms of the loan. A 30-year loan may have a lower rate than a 15-year loan, for example, but will also cost you more in the long run.
3. Make a Large Down Payment
Paying a larger down payment will help you get lower interest rates on your home loan. This is because lenders view borrowers with more up-front cash as less of a risk. If you can, try to put at least 20% down on the home, because this allows you to avoid extra fees like private mortgage insurance.
4. Ask for No Points
When evaluating a home loan rate, make sure to ask for “no points”. This means no upfront fees, and will ensure you get the best rate on your loan. Some lenders may be willing to negotiate for no points, and it’s usually worth taking the time to ask.
5. Shorten the Timeframe of Your Loan
If possible, try to get a loan with a shorter timeframe. While it may mean you pay a higher monthly rate, the total cost of the loan will be significantly less. This is because you’ll pay less interest over the life of the loan. For instance, a 15-year loan with a 5% interest rate will cost less in the long run than a 30-year loan with a 3.5% interest rate.
By following these tips, you can ensure that you get the best rate possible on your home loan. Just remember to do your research, ask questions, and shop around for the best deal!
