How to Find the Most Affordable Mortgage.
After a remarkable increase in the rate of mortgage around November last year (2018), the percentage rate have now retreat with about 4.57 percent as of mid 2019, and this is a very good news for any one who is a home buyer. Although even when rate is down, there is no guarantee that you are getting a good deal. The process involve in buying a home is usually very long amd frustrated, therefore atimes most of the homebuyers doesn’t go for the best deal but instead the easiest deal that comes most especially what there local banks have to offfer. Apparently when buying a home, the most important thing is to get the best mortgage, therefore when you shop around, you found lower rates at the different bank and the likes of HSBC banks are offering 30 years fix rate mortgage at an annual percentage rate at 4. 03 percent, while that of Fargo is 3.98 percent APR.
Firstly let talk about the mortgage rates will make us to understand this article more
Current Mortgage Rate
Even though the Mortgage rate always changes from time to time but currently these are the average rate on the most common home loans nation wide according to Bank rate
30-year jumbo: 4.54%
30-year fixed: 4.57%
15-year fixed: 3.98%
5/1 ARM: 4.45%
The lower the above mortgage rate, the lower is your monthly payment and the less the interest you will pay for the entire loan. This rates are national averages but however there are alot of many more factors that could affect your own mortgage rate and this factors includes;
1. You credit score
2. The type of loan
3. Your down payment
There for you should always try and get the best morgage in your area before you go for any house buying.
Steps to get the lowest priced loan available.
1. Shop for a Loan
Shopping for a loan gives you the opportunity to get the best mortgage interest rate and you can shop for mortgage in the following lenders which includes banks, mortgage brokers and also online originators(quicken loan) and aggregators(Lending tree), they have a website where you can fill out a preliminary form where you can immediately get the interest rate estimate or you can call of there representative who will also get you necesaary quotes, using the Bankrate you can always try to compare various mortgage rate and choose the best amongst them.
You can also get a very accurate estimate by simply calling the lender directly even though this may require you to drop your Social Security number with the lender.
Before you proceed with all this loan shopping it is better that you know the kind of home and type mortgage you are interested in, this will make the information that you will give to the lender more directional and finally make sure you have all necessary documents that may be required of you to fill as this will allow the process to go tiredlessly
2.Polish Your Credit Score.
Credit score have always been a very important factor that lenders look into before granting you a loan because your credit score will tell a lender how responsibly you have been doing with your financial responsibilities, how regularly and promptly you have been making all necessary outstanding payments. Therefore the higher your credit score, the clearer and smoother your chances of securing the best mortgage rate. It is not easy for credit score to rise normally but you can keep working on it because it is a good factor to get the best mortgage, study shows that the difference of 100 points on your credit score can save you hundreds of dollars on the same mortgage, and throughout the life span of the loan, it can save you upto tens of thousands of dollars.
Increase Your Down Payment.
It is not always a very easy task trying to get a higher down payment of upto 20 percent, but it is a very good factor that can make you get a good mortgage and save you alot of money along the way. You would not have to pay extra mortgage insurance when you can put down a 20 percent down payment of the loan you are requesting for.
3. Consider Small and Medium Lenders.
In pursue of a good mortgage, you should not only consider getting mortgage from bigger banks and major online lenders alone, you can also make enquiries into small lenders because in most time, this small lenders offers a very good mortgage rate too. They include; credit union and community banks and you can easily get them by searching online using the name of your home state. This small lenders renders better mortgage rate most times especially to people with variable income generation like those that are self employed who are into there own personal business.
4. Make Use of Mortgage Broker
Professionally, a mortgage broker will get always have an edge in getting a better mortgage rate than you when they shop among various lenders, even though you still need to work with them very closely to avoid any form of manipulations because they get paid by the banks and not you particularly. This is why it is suggested that you make your choice of brokers base on recommendation. Once you have a good Broker, it will always save you more and more.
5. Understanding CFPB Loan Estimate.
After a long search for the best mortgage rate, and you where able to find a suitable ones, then you ask them all for a Loan Estimate, a standard document designed by CFPB, which you can be able to use to compare mortgage rates as well as different kinds of loans. To get this, you will need to provide your essential informations and also your Social Security Code which can be use to access your Credit history. You can get Loan Estimate from as many lenders as you can, because multiple inquiries that are for the same purpose in within 45 days will not affect your credit score because they are all assume to be one enquiries
A House specialist, Steve Baughman, suggests that you get all the loan Estimates on the same day for easy and accurate comparison. When making this comparison, the major things to look for are;
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1. The Percentage rate
2. The interest rate and principal accrued after first 5 years of the loan
3. Total interest percentage, which is the total sum of interest you will pay over the loan term as a percentage of your loan amount.
How Does Credit Score Affects your Mortgage
This credit score is used by lenders to access your financial stability and your creditworthiness because a lower credit score will make you vulnerable to not being able to meet up with your loan payment unlike someone with a better credit score.
The most common type of Credit score is the FICO but nevertheless we also have the VantageScore. There ranges differs just slightly but still, a credit score of 700 point and above is considered good for both. Therefore credit score also play a role in the kind of mortgage rate you can get.
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