Your mortgage rate influences your monthly payment and the total amount you’ll pay overall during the loan term, so even minor differences add up. And with interest rates shooting to eye-watering highs (with no signs of substantially falling anytime soon), it may seem impossible to get a low mortgage rate. Fortunately, there are ways to set yourself up to get the best mortgage rate in San Antonio, even in this high-rate environment.
Read on and learn!
Improve Your Credit Score
A low credit score may not bar you from getting a mortgage, but it can be the difference between getting the best possible rate and being hit with more costly borrowing terms. That’s because the lender will use the score as the benchmark to decide your ability to repay the loan. The more confident the lender is in your ability to repay on time (higher score), the lower the mortgage rate they’ll offer.
To improve your score, pay your bills on time, and pay down your credit card balances (aim to keep a balance of no more than 20% -30% of your available credit limit). Also, check your credit report and work to clean them up if you find any errors.
Save Up for a Larger Down Payment
When you put a small down payment on a house, the mortgage lender considers you a higher-risk borrower than someone who makes a larger down payment. But when you put down a larger percentage of the purchase price, you lower your home’s loan-to-value (LTV) ratio, consequently lowering your interest rate. Moreover, while the lender may accept a lower down payment, less than 20% down will mean you’ll have to pay private mortgage insurance (PMI). PMI can range between 0.05%-1% or more of the original loan amount annually.
Note: For first-time homebuyers who cannot cover a 20% down, there are specific loans, grants, and programs available to help you buy a home.
When looking for the best mortgage, ensure that you contact several different lenders. Regional banks, national banks, mortgage bankers, and local credit unions might all offer specific loan products, each with its own fees and rates. Also, some mortgage lenders cater best to new homeowners, while others are better for refinancing. And since loan rates change frequently, you should try and contact the lenders on the same day and factor in associated fees to truly compare rates and calculate the potential savings.
Get the Best Mortgage Interest and Buy Your Dream Home in San Antonio!
Learning how to get the best mortgage rate is an essential part of the homebuying process. And if you’re considering buying a home in San Antonio, contact our experts. We’ve been helping our clients find and purchase homes in San Antonio and the surrounding areas for years, and we’d love to do the same for you! Call us, and let’s get started!