Looking to Buy a House? Concerned about the Interest Rate?
Getting a suitable interest rate saves you money, in the long run, buying a house. This is because a huge loan with high-interest rates amounts to making a costly monthly installment payment.
Take for example; a $100,000 loan with a fixed interest rate at 5% would accrue an interest payment of $93,256. A lower interest rate at 4.5% at the same principal will generate $82,407 monthly payments to the lender. Securing a loan from the second lender will save you a whopping sum of $10,849.
Do you intend securing a mortgage loan for purchasing a house? These few tips will help you how to get the best interest rates in purchasing your dream house.
Secure a Short-Term Loan
Short term loans have smaller interest rates contrary to long-term loans that have high-interest rates. Mortgage banks and loan lenders are always willing to oblige to your loan request knowing that it will be easier for you to pay. You can save a sizeable amount of money applying for this sort of loan.
You should ask for referrals from real estate agents, friends, and family about where to get low-interest rate loans for house purchase. There are online lenders, you can search on the internet, compare each of the online lenders and select the one that offers loan at a smaller fixed interest rate. Different lenders use different calculations to determine the interest rate your loan will be benched on. Find out which offers them would suit you most.
Go For Credit Unions
For-profit banks in their quest to generate profit from issuing loans have high-interest rates. Credit unions are not-for-profit lending bodies. Due to this, they have the lowest interest rates. You can go for this type of lending institution in order to save costs.
Have a Good Credit Score
A credit score is a numeric statement highlighting your financial worthiness. Most lenders today review credit scores to ascertain the probability of a prospective loanee defaulting on a loan payment. A good credit card score can enhance your chances of getting a low-interest loan.
Try an ARM
Adjustable rate mortgages have lower interest rates for the first few years unlike a fixed mortgage interest, the initial interest paid is lower for the first 3,5,7 years and changes periodically according to prevailing rates. You can use to lock in low rates for few years if you do not intend using the house for long.
Pay For Points
In order to get a loan at a lower interest, you may consider paying an upfront fee equal to 1% of the total mortgage amount. A lender drops the interest paid after you have bought the rate. Paying for points helps you pay for lower interest rates in maintaining your loan on a long term.
Type of House Bought
Lenders tend to lower interest rates for single family house mortgages than for residential house mortgages. The reason could be hinged on the fact that family houses are subject to lesser risk than residential houses. You can secure a mortgage loan for a family house at a lower interest rate.
There you have it! Above are a couple of tips to help you get best interest rate when buying a house. You don’t have to break the bank just because you are buying a new home. With so many mortgage banks and loan lenders springing up rapidly, you should scrutinize the policy and terms of each financial institute before acquiring a loan for the purchase of a house. By following the tips above, be rest assured of getting the best home deals.