Interest rates are at historic lows; however, not everyone will qualify for exceptional mortgage rates. This is because mortgage rates are dependent on a number of factors specific to the borrower, including their credit score, available down payment, employment history and more.
In today’s blog, we’ll cover four ways to positively impact your mortgage rate.
Improve Your Credit Score
Maintaining a high credit score is a great step towards being approved for a mortgage with a low interest rate. Here are five things to do if your credit score needs a boost!
Save a Considerable Down Payment
As the amount of money you save for a down payment increases, the amount of money you will need to borrow from a mortgage lender decreases, making you less of a risk as a borrower. Most often, borrowers with low risk get better mortgage rates.
It’s important, however, not to drain your savings when making a down payment. While many homebuyers aim for a down payment of 20% of the purchase price of the property, keep in mind that you’ll also have to set money aside for closing costs in addition to a down payment (typically 2%-5% of the total loan amount).
Maintain a Steady Income
According to Credible.com, many lenders prefer to see applicants who have maintained a position with their current employer for at least two years prior to completing a mortgage application. Ideally, applicants should avoid changing jobs or simply quitting a job during the mortgage application process. If needed, consider increasing your income through a part-time job to make some extra cash and increase your down payment.
Ask Your Lender About First-Time Homebuyer Programs
If you’re a first-time homebuyer, it’s important to know that many states offer programs and incentives to encourage homeownership! While some states offer low-interest mortgage loans, others offer grants that provide assistance with the down payment and/or closing costs. Make sure to speak with your mortgage lender to see if you qualify for any of the programs or incentives available in your state.