You have the power to improve your chances of getting a great rate on your mortgage loan. Your interest rate is based on several factors and there are things you can do to help lock in the best rate available for your mortgage loan.
Remember: Our mortgage bankers are available to discuss how you can personally tailor your financial decisions to get the best interest rate.
Improve your credit score.
Your credit score will help determine if you qualify for a loan and what rate you’ll pay for that loan. Chances are, the higher your credit score, the lower your rate. You can qualify for a mortgage if your credit score is low, but your down payment requirements may be higher and your loan options may be limited.
Increase your down payment.
There is a direct relationship between your down payment amount and your interest rate. A loan with 5% down is considered a higher risk than one with 20% down and may have a higher interest rate. While more expensive upfront, the savings over time that a lower interest rate provides may be worth it.
Be cautious with points.
Points are a payment of interest in exchange for a lower rate. Make sure that there are long-term benefits to paying to lower your interest rate, especially if you may be in a position in a few years to refinance. Long-term planning is key when it comes to points. Ask an Atlantic Bay Mortgage Group Mortgage Banker for more information.
Decrease your Loan-to-Value ratio.
Your loan-to-value (LTV) is the amount you are borrowing divided by the appraised value of your home. The lower your LTV, the less risky your loan is and the better the chance that you’ll get a lower rate. You can improve your LTV by reducing the amount you need to borrow. You do this by increasing your down payment or receiving gift funds (if your loan product allows this) to be applied towards closing costs and down payment.