Saving as much money as possible can be helpful for many home buyers since it is such a big purchase. Getting lower interest rates on your home loan is one way that you can save money. To get lower interest rates you can put more down, focus on building your credit score, and have a long work history.
Put more Down
Putting more money down lowers your rates because the loan-to-value ratio is lower, therefore your lender’s risk is lessened. There are additional benefits and drawbacks to putting more money down on a home. When you put more money down it makes your monthly payment smaller, but it likely means that you will have less money in your savings in case of emergency.
Focus on Building Your Credit Score
Your credit score is what lets the lender know how reliable you are to pay your mortgage. The higher the score, the more likely you will receive lower rates because your lender knows this is a less risky loan. When you want to qualify for a mortgage, you can have a credit score lower than 700, however this will make a difference in your rates. You should have a credit score of at least 750 to qualify for the best rate.
Long Work History
When you get a mortgage, your lender wants to know if you will be reliable in paying the debt. For this reason, your work history is important. If you have a consistent work history, especially if you have worked at the same place for years, this will show your lender that you will consistently have an income. In these conditions, a lender will be more likely to give you a good rate because the loan is less risky. Before you close on the home, your lender will verify your employment. Therefore, you shouldn’t change jobs or quit your current job before the home closes.
Getting the best rates on your home loan can help you save money in the long run. Many of the ways to help improve your rate may take some time, so it is important for you to start preparing in advance so you can purchase a home. If you are unsure where you should start, you can always reach out to a professional to help you with your finances and getting the best rates.
Check out this article on how to avoid sticker shock when buying a home!