The most inconveniencing experience is when the day comes when you are finally ready to buy a home, and you discover you cannot get one just because of mortgage rate. That is when you come to discover that your mortgage interest rate is a big deal. On average a home costs over $260,000, the kind of money most of us do not have or cannot liquidate. Therefore your best bet is mortgage and here is how you can go about to increase your mortgage rate to avoid such disappointments.
1. Credit score
Bottom line as you probably know by now is that you need to make improvements on your credit score. The higher the credit score, the more you show banks that you are more of an asset than a risk. That you will not default on the loan, they will give you. This also translates into meaning that you will pay less to borrow from banks. You may ask less by how much? A credit rate of 780 to 850 for let says a 30 year fixed mortgage will pay on average of $164,000. Putting it into perspective, if your credit rate is that high according to myFICO.com, you will pay $33,000 less compared to one who has a poor credit rate of say 660 to 679. To improve your credit score, consider spending less than 30% of your availed credit limit, having no credit card debt and timely payment of bills.
2. Employment Record
Banks love the employed and once you show that you have had not less than two years of a steady flow of income from one employer you get their attention. Why? Because you are less of a risk as opposed to even those who are self-employed twice as long.
3. Spend for it
As a general rule, putting more money down scores you a lower mortgage rate such as 20% is the gold standard. Even if lenders accept lower figures than that, often a time you’ll have to pay private mortgage insurance. This will change the range to being 0.5% to 2.25% annually of the original amount of loan. Also, have about a quarter year worth of savings in cash in your account.
4. Shop around
Weigh your options, by searching for the best rate. Settling with your usual financial institution may prevent you from discovering better ones out there. Online is the best place to start your search.
5. Lock in
Upon signing the purchase agreement and securing your mortgage loan, get more facts from your lender like how long it may take to process the loan. This way you will get to see if they will coincide with your rate. At times this comes at a fee, especially if it takes not less than two months, though there is still a chance that it might eventually pay for itself if there is a rise in the rates. To get to know the up and down movement of rates, look at the predictions of mortgage experts on bank rates.
Remember these are just five of the many ways for you to consider in getting the best mortgage rates. There are other ways, but these are good enough to set you up well on your quest for a mortgage.
Big Shout-Out to the mortgage experts at Community Lending Centre for this post. Check out their contact info here:
Community Lending Centre
500 – 2608 Granville Street
Vancouver, BC V6H 3V3