While interest rates on mortgages are largely out of your hands, there are certain measures you can take to ensure that you get the best possible rate on your loan. Considering you stand to make payments on this loan for up to 30 years, it is obviously in your best interest to find as low of a rate as you can. By using a combination of modern technology and good old fashioned leg work, you can lock in a great rate. For how to find the lowest mortgage rate on your next home purchase, read through the following steps.
How to Get a Great Low Rate for your Mortgage
Step #1 – Learn What to Expect
You won’t be able to evaluate what a good rate is unless you know the current market. Interest rates offered by banks on home loans can change quickly in reaction to market conditions, so don’t assume that numbers you saw three months ago are still valid today. Take a few minutes to use an online mortgage calculator to find prevalent rates in your area. The specific rate you will be offered depends on your credit, how much you are borrowing, and more. However, you should go in knowing approximately what the rate should look like so you can start working from that point.
Step #2 – Get an Offer
When you have chosen a house to try and purchase, the next step is to get an offer from the bank for your loan. The bank you go to doesn’t really matter at this point, you just need to get something down on paper for bargaining purposes. If you are purchasing a new home, the building likely has a preferred lender that they are working with and will possibly give you a better rate to stick with them. Once you have the offer in hand, you can decide if it is acceptable to you or if you should keep shopping. It never hurts to get at least one more offer on the table for your loan before you sign on the dotted line, so try not to commit too early.
Step #3 – Use Your Leverage
Banks are in the business of making loans, so they want to work something out with you. A loan at a slightly lower rate is better than no loan at all in most cases. With that said, they do have certain limits that they will not be able to go beyond. If you are not totally satisfied with the loan offer you have in hand, head to another lender and show them the terms. Should they be willing and able to improve the rate for you, consider taking their offer back to the original lender for one last review. Once all parties have had a chance to make their best and final loan offer, you should not have trouble picking out the best one and sealing the deal on your home purchase.