How to Make Your Mortgage More Affordable
Several factors determine your mortgage, such as your credit score, chosen lender, type of loan, and down payment size. This is one of the biggest reasons why rates vary so much. But the point is, if you prepare your finances early and invest time in shopping around, you can make your mortgage more affordable and save yourself interest charges over the life of your loan. Check out the best tips below and get the lowest mortgage rates possible today.
1. Take your time and shop around.
A mortgage is a big financial commitment so shop around until you find the lowest mortgage rate. Research multiple potential mortgage lenders and check out their rating, customer service, and consumer complaints. Apply to several lenders within the same 14-day period, too. Do not just go for big banks though – check out small banks, credit unions, and other mortgage companies. Then, compare fees to see which the most affordable option is. This can save you a lot of money!
2. Improve your credit score.
There is no going around this step. Your credit score plays a big role in the rate you qualify for. Focus on paying down your debts, settling any collections, and paying your bills on time to increase your score. This is one investment that is guaranteed to help you forever.
3. Offer a larger down payment.
The bigger deposit you offer, the more lenders see you as a low-risk borrower. There is also the added benefit of lower interest rates if you make a large down payment.
4. Use points to make your mortgage more affordable.
Secure a more affordable mortgage by using discount points and paying upfront. Just make sure the break-even point makes sense for your goals.
5. Choose a loan with a shorter-term.
These loans usually come with lower rates because the risk to lenders is lower, too. Consider a 15- or 20- year loan instead of a 30-year one.
The moment you find a rate that you are happy with, lock it for a set period of days to make your mortgage more affordable. Most lenders offer 30-day rate locks for free, with longer rate locks available at an additional fee. This means you must close on your home within this timeframe to secure the rate. Prepare in advance and work fast to guarantee a more affordable mortgage for you and your family.