| al estate prices plummeting across the country, this | | | | Every lender has its own standards for determining the |
| may be the best time in years to be in the market for | | | | mortgage rates that they’ll offer — and |
| a new home. Getting a great price on that new dream | | | | very few offer the same mortgage rate to all comers. |
| home is a reward in itself — but if you can | | | | The only way to be sure that you’re getting the |
| couple that sweet deal with a low mortgage rate, | | | | best mortgage rate available to you is to get several |
| you’ll save even more money. Not sure how to | | | | quotes from different lenders. That will give you a |
| get the lowest mortgage rates available? Here are | | | | basis for comparison — and for bargaining. |
| some tips to point you in the right direction. | | | | Check with your own bank first. |
| The higher your credit score, the lower your mortgage | | | | Be sure to look into a mortgage from your own bank. |
| rate. | | | | Many banks offer lower mortgage rates to good |
| Your credit score is a numeric representation of the | | | | customers, and some offer even lower rates if you |
| risk a bank or lender takes in lending to you. A high | | | | agree to an automatic deduction from your account |
| credit score means that you’re a good risk, and | | | | for your mortgage payment. |
| most lenders will extend their lowest interest rates to | | | | Make a larger down payment. |
| you. If you don’t know your credit score, this is | | | | A larger down payment will reduce the amount of |
| the time to get your credit report and find out | | | | your loan, and could reduce your interest rate as well. If |
| what’s on it. | | | | you can manage to put 20% down on your mortgage, |
| Thanks to legislation passed a couple of years ago, | | | | most lenders will offer you a lower mortgage rate than |
| you can get your credit report for free once a year | | | | if you put down less money. A higher down payment |
| from each of the three major credit reporting | | | | makes you a better risk for a loan because the bank |
| agencies. You can order your free credit report online. | | | | figures that you have skin in the game. Statistics |
| Take the opportunity to clean up your credit report | | | | show that borrowers who have more equity in their |
| — and maybe boost your rating. | | | | homes are far less likely to foreclose because they |
| If there are mistakes on your credit report, write to the | | | | stand to lose a lot more. |
| agency to have them corrected. Be sure that you | | | | If you can afford a higher monthly payment, opt for a |
| provide proof of the corrections you want made | | | | shorter mortgage term. |
| — if you’ve paid off a credit account that | | | | It’s a basic rule of thumb. The less time you |
| is listed as unpaid, for instance, send a copy of the bill | | | | take to pay off your mortgage, the less interest |
| showing it paid off. | | | | you’ll have to pay on the money you borrow. |
| Paying down some of your credit cards will also help | | | | While opting for a twenty year mortgage instead of a |
| increase your credit score by lowering your | | | | thirty or forty year one will mean higher monthly |
| debt-to-credit ratio. If you decide to cancel credit cards, | | | | payments, you’ll save tens of thousands of |
| though, be careful which you choose to cancel. Hang | | | | dollars over the course of the mortgage, and will |
| on to older credit accounts because they’ll | | | | almost certainly be offered a lower mortgage rate. |
| affect your credit score positively. The longer | | | | Pay for points on your mortgage. |
| you’ve held the account, in fact, the better its | | | | Another way to reduce the interest rate on your |
| effect on your credit rating. | | | | mortgage is to pay for points up front. In essence, |
| Check around to find out if you qualify for any special | | | | paying for points is paying the interest on your |
| mortgage programs. | | | | mortgage up front. A discount point on your mortgage |
| First time home buyers may qualify for special | | | | will usually reduce your mortgage rate by .125 percent, |
| mortgage rates through government loan programs. If | | | | so if you’ve been offered a mortgage rate of |
| you qualify for a fist time home buyers’ | | | | 7.5% and pay two points on it, your interest rate could |
| program, you may be eligible for a loan with interest | | | | drop to 7.25%. That drop will lower your monthly |
| rates as low as 2.5% on a thirty year mortgage | | | | mortgage payment and possibly decrease the overall |
| Shop around for the lowest mortgage rates. | | | | cost of the loan. |