Mortgage rates are at all time lows, but even with this fact, getting the best possible rate should be your goal if you are refinancing or buying a new home. These tips will help you get the best possible rate.
First, before you even begin shopping for a loan, get a copy of your credit history with the score. You will have to pay a little bit for the score, but you need it. Check your credit history for errors, and get them removed if there are any there. Remember that this process takes time, so start making changes to your credit score early in the home buying process.
If your scores are below 720, you will need to make some efforts to improve them. Start by paying all of your bills on time every single month. Then, look at your credit history to see if the credit limits listed for your debts are accurate. If you need to, have your credit card company call the credit bureaus to have the listed credit limit increased to match your actual credit limit. Remember, your credit score is based in part on the ratio of your credit to the credit limit on each account.
While you are waiting to get a loan locked in, do not apply for any new forms of credit. New credit inquiries can lower your credit score. They also make you look like a risky borrower to the mortgage lender because you are actively seeking credit.
Once you have your credit score as high as it can go, file the application for your loan. If you have a property in mind or are refinancing your existing property, you can lock in a rate when it hits what you want. The locked in rate can be held for a period of time while you get the closing scheduled and finalize all details with the property’s seller. Locking in a rate guarantees that your rate will not go up, but if the rate goes down you are stuck with the one you locked in, so this can be a bit of a gamble.
Be sure to shop lenders as well. While there is not much competition right now for rates since the government has put some rules in place to keep rates low, you may find a slight variance from lender to lender. Be sure to ask about the APR, not just the interest rate, as this will incorporate all of the fees you are paying for the loan in order to give you a more accurate picture of the loan’s cost.
If you follow these steps, you will be able to get the best possible rate. Remember, rates change daily, if not hourly, so you always run the risk of the rate going down after you get yours. Do the best you can, but remember that there are no guarantees when it comes to mortgage rates.
