Home loan interest rates are a tricky issue, and if you are working with a real estate agent to find your first home, knowing as much as you can about rates going into the home loan application process is a very good idea.
How can you get a lower rate when shopping for a home? There are some strategies to consider but many of them involve starting as early as possible in the planning stages.
Getting A Lower FHA Home Loan Interest Rate By Shopping Around
As you would never buy a used car from the first person you meet selling one, it’s important to shop around for a home loan lender offering the most competitive interest rates and terms.
If you are a first-time home buyer, shop around for a lender letting them know you are a new house hunter; you may find a deal from a participating lender offered to first-time borrowers that isn’t necessarily advertised or offered to non-first-timers
Getting A Lower FHA Home Loan Interest Rate With Good Credit
Some borrowers do not realize that lenders will offer better interest rates to those who apply with better credit.
The key to improving your credit is not to pay third party companies who dangle promises, but rather simply to pay on time, every time and cut your debt ratio as low as you can.
Avoid closing out old credit cards as the age of your accounts will be a factor; just reduce the balances below 50% (some sources say 30% is ideal) and be sure to read the latest reports on what credit rating companies consider to be a better risk in terms of credit use, credit limits, and how close to those limits you can be and still get a better credit rating.
Also avoid opening store credit card accounts if you have a smaller credit history-unless you specifically want a particular store card, can keep the balances low, and avoid late payments at all costs.
Negotiate With The Lender With A Higher Down Payment Offer
Those who qualify for maximum financing on an FHA mortgage could try to bargain with the lender for a lower interest rate in exchange for a higher down payment.
The smallest down payment allowed on an FHA mortgage is 3.5% of the adjusted value of the property. If you offer to put more down, you not only potentially save money over the lifetime of the loan but you have some leverage with the lender those who can’t pay more down don’t have.