When looking for a home, one of the strategies future homeowners need to keep in mind is to shop for the lowest mortgage rates. If done well, this can save homebuyers thousands of dollars over the coming years.
It is important that when you are shopping for a home you do so with a plan. You will be required to carry out sufficient upfront research to get an idea of what you want and once that is accomplished, find out who can do that for you.
Below we have outlined a number of strategies for you to follow when looking for the best Plantation mortgage rates.
Establishing a Baseline
When looking for the best Plantation mortgage rates, the first thing you can do is to get a trusted friend or associate you to refer you to a reliable lender. The lender will help you find out what your credit score is and help you understand what your loan options are.
A good lender will help you compare various loan options, for instance, they will walk you through FHA loan terms and compare that with conventional loan terms to help you determine which option would best serve your need.
By doing so you will have a rough idea of what to look for when shopping with other lenders.
Raising Your Credit Score
Most traditional lenders will charge you a higher interest rate if your credit score is low. By raising your credit score you can significantly reduce your interest rates.
The minimum credit score required by conventional lenders ranges between 620 and 640. Instead of aiming for this minimum credit score requirement you should do your best to ensure that your credit score rating is not less than 740 since this almost guarantees that you will get a reduced interest rate when getting a loan for your plantation home.
Duration of the loan
How long you choose to keep your loan will play a key role in determining the type of mortgage you end up choosing. For example, let us say that you are a home buyer that is risk averse which means you will probably end up choosing a fixed-interest mortgage, however, if you only plan to live/own the house for not more than 5 years, you would be better off choosing a 5/1 hybrid mortgage. By doing so you might benefit from paying lower interest rates.
It might not sound like much but it adds up to save you thousands of dollars every year.
Making a large downpayment
One of the factors that determine how much interest your lender charges you is the amount of risk that the lender is taking. By making a huge downpayment, you reduce the lender’s risk which, means that you will be eligible for a lower interest rate.
Buying a single family home
During the housing crisis, condominiums lost more value compared to other types of homes. This has led lenders to be cautious when offering mortgages for these types of homes and usually the interest rate will be an eighth higher compared to other types of homes.
Thankfully though, if you make a big down payment you are likely to not get charged the high interest rate.
Be Ready To Answer Some Questions
If you want to receive an accurate quote from your lender, you will be expected to answer some questions that they will have for you.
Some of the questions include:
- What amount of down payment do you expect to make? This is because another factor that affects interest rates is the loan-to-value ratio.
- Are you buying a condominium or a family home? Chances are that if you are buying the former, with an LTV above 75% your interest rate is likely to be higher by 0.25%.
- Are you refinancing or purchasing? If you are refinancing your home, it could raise your interest rates by as much as an eighth.
- Escrow or no escrow? If you choose to pay taxes and insurance directly without making use of an escrow service, your interest rate is going to be higher since it is considered more riskier.
Do Tons of Research
It would be a disservice to yourself if you did not put in any extra effort to ensure that you got the best deal. You will need to shop around and get a number of quotes if you plan on getting the best deal.
Make Inquiries on Fees
When shopping for the best interest rates, many homebuyers are not aware that fees charged by a lender affect the mortgage interest rates. You might come across a lender whose interest rates are much lower than all the rest. This might be due to the fact that they have not bundled their interest rates with fees.
Be always sure to confirm to make sure you are getting the best deal.