Being a homeowner is a dream for many people. But because this goal isn’t one that’s easily achieved, it can be hard to know how to plan and prepare for this long journey when you’re only at the beginning of it.
While most people know that they need to save for a down payment and be able to afford their monthly mortgage payment, many people don’t realize that the type and terms of their mortgage loan can have a big impact on the total amount of money they end up spending over the life of their loan and their home ownership.
So to help ensure that you’re able to find the best deal and save the most money on your home purchase, here are three tips for qualifying for a great home loan rate.
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Boost Your Credit Score
The details of your home loan are going to be very dependent on your current financial situation. One of the biggest factors is how well you’ve proven yourself with the credit you’ve been given in the past, which is where your credit score comes in.
According to Jennifer Bradley Franklin, a contributor to Bankrate.com, it’s wise to do everything in your power to boost your credit score before you start applying for home loans. The better your credit score is, the more favorable of an offer you’ll get for your home loan. So while it might be challenging to change some of your habits that are keeping your credit score lower, it could be well worth it to you in the long run.
Know The Pros and Cons Of Difference Rate Types
When you get a home loan, there are multiple different types of home loan rates that you can get. The one you’ll want to choose will depend on your personality and your financial situation, but it’s good to know what your options are so you can make the most informed decision.
Deborah Kearns, a contributor to NerdWallet.com, shares that the most common rate types that people choose are either a fixed rate mortgage or an adjustable rate mortgage. With a fixed rate, you’ll pay the same rate over the entire course of your loan. But with an adjustable rate, you could wind up paying more or less on different years. You’ll want to think long and hard before you decide which option is going to be best for you.
Save Up For A Bigger Down Payment
Another thing you can do to give yourself a better chance of getting a good offer when applying for home loans is to require less money from the loan. To do this, Michael Pearl, a contributor to The Simple Dollar, recommends that you save up more money for your down payment. The more money you’re able to save and contribute, the more favorable the terms of your loan rate will be.
If you’re going to be applying for a home loan soon, consider using the tips mentioned above to increase your chances of getting a favorable mortgage loan rate.