If you’re buying a home in the future, getting a great interest rate on your mortgage should be a major concern. By getting a great rate, you’ll be able to pay less for your home overall, which should make it easier to pay your principal balance over the years.
There are a number of different factors that go into determining your mortgage rate. Your credit score is one. Your income stability is another. The amount of money you put down as a down payment is also a factor. We’ll discuss each area in greater detail below.
How Much Will You Put Down On Your House?
In today’s housing market, lenders typically expect homeowners to put 20% down on their new property. This is a great idea if you’re looking for the best mortgage interest rate.
Did you know that lenders base interest rates on the amount of risk they have to take? If a homeowner puts a large down payment on their property, they are less of a risk than somebody that puts a small down payment.
The easiest way to qualify for a lower interest rate is to put down more than the expected 20%. If you can afford it, it’s certainly a good idea to do so. You’ll save plenty of money in interest over the long run.
According to Mortgage Loan Ease, a website focused on locking in on a good interest rate, “Buying a home could be such a thrilling experience.” The experience gets even better when you’re paying less mortgage interest than expected.
Can You Prove Your Employment And Income Stability?
Today’s mortgage lenders are leery about who they lend money to since the mortgage crisis took place about a decade ago or less. So lenders are now looking at potential applicants under a microscope.
One of the main criteria to qualify for a loan is to prove you’re steadily employed. The longer your employment history, the better chance you’ll have of receiving the loan you want. Plus, you’ll have a much easier time getting a low-interest rate mortgage if you’ve worked at the same place of employment for many years.
Why is employment longevity important? It proves to mortgage lenders that you’re going to have a job based on past history. If you’ve stuck with the same company for the last 10 years, odds are you’ll be with this company for another 10 years or more. It proves you have an excellent employment track record which means lower interest rates.
How Is Your Credit Score?
Finally, your credit score will also play a major role in whether or not you get a great interest rate on your mortgage. If you have a poor credit history and low credit score, lenders will consider you a risk and charge more interest. On the other hand, if you have a great credit history and a high credit score, you’ll be much less a risk and lenders will give you a great interest rate.
Please keep this information in mind to get a great mortgage interest rate the next time you apply for a home loan.
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