A home purchase is one of the biggest purchases that you made in your lifetime. Opting for a home loan program helps you with the finance and thus, makes it easier for you to fulfill your dream of homeownership. However, when you apply for a home loan program, you want to get the best mortgage rate as it helps you save some cash over the life of the loan.
Wondering how to get the best mortgage rates in Houston, TX? Well, focusing on some important things will help you with this. Here are the ones –
Increase your FICO credit score
Your three-digit credit score can make the difference between getting the best mortgage rate or being hit with more costly borrowing terms. A mortgage lender will use your credit score to decide your ability to repay the home loan. The higher the score, the better creditworthy you will be. Generally, the more confident the lender is in your ability to repay on time, the lower the interest rate they will offer. In order to improve your credit score, pay your debts on time, don’t apply for any new credit, and correct the errors if there are any. Taking these steps will help improve your credit score and make you eligible for the lowest mortgage rate.
Build a record of employment
You will be more worthy to the lender for a better interest rate when you can show at least two years of steady employment and earnings to the lender, especially from the same employer. Besides, you should be prepared to show pay stubs and W-2s. It can be more difficult to qualify in case you are self-employed or your payment is coming from several part-time jobs.
Save for the down payment
Putting for more down can help you get the lowest mortgage rate, especially if you have enough liquid cash to fund a 20 percent down payment. There are lenders, who will agree to approve your loan application with lower down payments, but less than 20% down usually means you will have to pay private mortgage insurance that can range from 0.05% to 1% of the original loan amount annually. The sooner you can pay down your mortgage to less than 80 percent of the total value of your home, the sooner you can get rid of mortgage insurance that will reduce your monthly bill.
Shop for several lenders
When you are looking for the best rate, you should always do the necessary research to ensure you are getting the best fit for your situation. Look beyond the lender in your locality, ask for quotes from several lenders and compare these carefully. It will help you understand who is offering the best rate and then you can opt for that lender.
So, focus on these things to get the best mortgage rate for your loan application and buy a home of your dream.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.