If you are wondering how to get the best mortgage rate you have found the right article. Many homebuyers wonder how they get the best mortgage rate. By following a few easy steps you should be able to get a really good interest rate on your mortgage.

Getting the Best Mortgage Rate – Your Down Payment

The down payment you make on the home purchase will impact your overall mortgage rate. The more you put down the lower the interest rate will likely be. When you are working with a loan agent you want to ask them to provide you with details on how much you put down versus how much the interest rate will be.

Keep in mind, if you put down a small down payment (less than 20%) you will have to pay PMI (private mortgage insurance) every month. The alternative is you will have to get a loan package that includes a primary mortgage and a secondary home equity loan. The second loan is always at a higher interest rate.

Getting the Best Mortgage Rate – Points

People researching how to get the best mortgage rate should definitely understand what points are and how they work. A point is equivalent to 1% of the mortgage amount. So, if you are buying a home and getting a loan for $100,000, one point is equivalent to $1,000.

Many mortgage lenders will provide you with an opportunity to buy down your interest rate. Basically, you pay for a lower interest rate by paying 1 or more points. This is a good idea if you plan to live in the house for at least 3 – 5 years or longer.

Basically, calculate the monthly payments at the various interest rate levels (the mortgage lender should be able to provide you with those details) and see if you are saving enough money each month to make it worth your while to lay out the points (points are paid at or before the Closing).

Getting the Best Mortgage Rate – Your Credit

Your credit score has a direct impact on the interest rate you can expect. Make sure you take a look at your credit reports (on all 3 major credit bureaus) and clean up any mistakes or problems on them. This will help ensure you have the best opportunity to get the lowest possible interest rate.

Getting the Best Mortgage Rate – Locking-In

If you are trying to get the best interest rate on a mortgage it is important for you to understand the lock-in process. Virtually every lender will give you the opportunity to lock-in your mortgage interest rate. Basically, by a specific date you have to finalize your loan details and lock in based on the interest rate being offered on that day.
The amount of time you have to lock-in and the process of locking-in may vary from lender to lender so make sure you have a full understanding of this. Also make sure you know if there are any fees associated with you locking in.

If you follow these easy steps you should be able to lock in the best mortgage rate.

This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.

Author Bio: Helpful mortgage information at Online-Home-Mortgage.net P. Payne works for OHM Mortgage and Foreclosure Information Site providing answers to all those questions people need to know.

Category: Finances
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