4 Ways To Get A Good Mortgage Percentage Rate
If you are planning to buy a home, the mortgage rate that you receive will affect how much you will ultimately pay for the property. The interest rate for your mortgage is partially dependent on the current interest rates nationwide. However, there are some other factors that are dependent on you. Here are a few things that you can do to ensure that you get a good mortgage rate:
Work on your credit score.
Your mortgage lending rate can be adjusted to higher levels based on certain criteria, such as your credit score. Your credit score is assigned based on the amount of debt that you owe, how faithfully you have made payments on past and current obligations and other factors, such as past bankruptcies. The score gives the financial institution an idea of your credit worthiness. A higher credit score can help guarantee a much lower mortgage interest rate. Likewise, as your credit score decreases, your interest rate increases.
Maintain a stable income.
Lenders usually prefer borrowers who have a steady source of income. This means that your job history should be relatively stable. If you have switched jobs every few months for the past few years, it can affect your mortgage interest rate. It is best to maintain your job for at least a couple of years. Additionally, any changes to your income that are related to job changes should show an increase. In other words, they should show promotion instead of financial decrease.
If your income is from your own business or self-employment, you will likely need to show quite a bit of documentation to verify that your income is stable or progressing. The mortgage lender may request copies of your tax returns to substantiate your income claims.
Submit a large down payment.
A larger down payment can help you receive a lower interest rate. A small down payment is associated with high risk. Likewise, if you are able to pay a large percentage of your home's cost up front, the risk associated with your loan is lower.
Increase your savings.
A mortgage lender also looks at the amount of money that you have saved or that you have in reserve when determining the risk involved with your loan. If you have a large amount of cash in reserve, especially if it is enough to cover several months of mortgage payments, you will likely receive a better mortgage rate.
To find out what interest rate you qualify for, schedule an appointment with a mortgage company in your area.