When you're searching for the best mortgage rates, there are plenty of pieces you need to consider in the pricing process. The major factors that mortgage lenders consider when deciding the rates for your home loans include:
- Credit score
- Price of your new home
- Property location — usually in relation to the nearest fire hydrant or fire department
- Amount of your down payment
- Loan term and type
If you received lower rates than expected, one of the components above may have sent red flags to your mortgage lender. You can improve your rates by fixing any issues your lender may have with your personal finances.
How to get the best mortgage rates
The most effective way to earn the best mortgage rates is to mitigate any issues that may lead to higher rates. Although this process can be somewhat time-consuming and may require some legwork on your behalf, it can save you thousands of dollars in the long run.
Improve your credit score
The major reason you are having trouble getting a mortgage — or finding decent rates on one — may be because of your low credit score. Loan originator Fannie Mae reports that a credit score of 620 or above should qualify you for a mortgage, but an excellent score of 750 or above can help you secure the best rates. Work hard to try to improve your credit score by paying off debt as soon as you can and keeping credit card balances low. In time, you should notice an improvement that can translate to better loan rates.
Save up for a down payment
Unless you qualify for a government-assisted mortgage, such as a VA loan or FHA loan, you can expect the best rates when you put 20 percent down on your new home. While many lenders require homebuyers to put 20 percent down on their homes, others will charge high monthly rates to those who cannot afford to do so. If you can't afford to put 20 percent down, you may need to borrow money in the form of a gift from a friend or family member or take out a small personal loan.
Secure a loan from a trusted lender
If you're on the search for a mortgage lender that can offer you a personalized experience, guiding you through the loan process and ways you can improve your personal finances, get in touch with Nationwide Mortgage Bankers.