It’s no secret that buying a home is a very big financial commitment. Whether you’re a first-time home buyer or you’re looking to find your next investment property, it’s important to explore all of the options available to you to secure a good mortgage loan rate. Shopping around for a great mortgage company is one of the bests ways to ensure you’ll get the rates you want and that you’re working with a mortgage lender you can trust.
5 Factors to Consider When Applying for the Best Mortgage Rate
1. Should I go with a fixed or adjustable rate mortgage?
There are many advantages and disadvantages to both of these conventional loan options, so be sure to do your research before committing to one over the other.
2. Should I pay for points?
Points are up-front fees that can be used to lower your ongoing interest rates by a fixed amount. This means if you take out a loan for $200,000 at 4.25% interest, you could possibly pay $2,000 up-front to lower your rate to 4.125%. This can be a good idea if you plan to pay your loan off over a significant amount of time.
3. How much can I expect to pay in closing costs?
On average, closing costs are about 3% of the overall purchase price of your home. But keep in mind that you can shop around to find lower rates if you’re unhappy with what one lender is offering.
4. Can I qualify for special programs?
Before you hand your information over to a loan officer, find out whether or not you’re eligible for certain discount programs like VA loans or FHA loans.
5. How much can I afford to put down?
Typically, a lower down payment results in higher interest rates. If possible, aim to put down about 20% of your home’s purchase price to avoid paying more over time.