How Do I Know I am Getting the Best Rate?

If you’re planning on buying a home soon, or are already in the process, one of

the most important steps is purchasing a mortgage. In fact, if you are serious

about buying a home, looking into your mortgage prospects is probably the first

thing you should check off your list. Too often, eager homebuyers neglect to

search for the best rate possible. Skipping this step and going with the first

option that you find can end up costing you in the end. There are many factors

that go into your rate that you can’t control, but there are also ways for you to

ensure that you’re getting the best rate possible.

Credit Score

One major aspect that you can control when it comes to getting the best rate is

ensuring that your credit score is in tip-top shape. Lenders use your credit score

to predict how reliable you will be in paying off your loan. The general rule of

thumb is the higher your credit score, the lower the interest rate. If you’re looking

into purchasing a home, be sure to look into your credit score range as soon as

possible and take action if needed. There are many ways to boost your credit

score before you purchase a mortgage.

Down Payment

Another factor in your rate is your down payment. The higher your down

payment is, the lower your rate will be. This is why it’s crucial to build a strong

savings before you look into buying a home. Typically, 20 percent or more for a

down payment can keep you at a lower rate. If your down payment is lower than

20 percent, you’re going to be facing higher interest rates.

Loan Type and Term

When you’re shopping around for your mortgage, keep in mind that the type of

loan that you choose may affect your rate. Rates can be significantly different

depending on the type of loan that you choose. Loan term is another big factor.

Typically, shorter-term loans have lower rates and lower costs, but higher

monthly payments. If you can afford the higher payments each month, you may

choose a shorter-term loan so you can ensure that you’re getting a lower rate.

However, you don’t simply want to pick the option that has the lowest rate. Be

sure to weigh all aspects of your loan type, term, and rate before making a

decision.

Closing Costs

You may be thinking, “What do closing costs have to do with my rate?” When

you’re shopping around for a mortgage, you may notice that some companies

raise closing costs in order to lower rates. While you may be initially attracted to

the very low rate in front of you, it’s really just being tacked on to the closing

costs that you have to pay for in the end. At Poli, we have the ability to provide

low rates AND low closing costs. There are no cutting corners to provide the

best rates possible. If you find a rate that seems too good to be true, you may be

paying for it in your closing costs.

The only way to know if you’re getting the best rate possible is to be prepared,

shop around, and compare. While some rates may be initially attractive, you

should consider all of the elements that go into your rate before making a

decision.

Want to learn more? Visit www.polimortgage.com for more information.