David and I were just talking about mortgage rates. You know, the things you chat about over a cup of coffee. And since David has helped so many clients secure the lowest rates possible, I thought, “Why not spill the tea… or coffee… or…” Do people still say that?
So, David, let’s jump right in.
What is the most important thing that potential home buyers can do to get a low interest rate?
Well, we start by maintaining a high credit score. Obtaining the lowest interest rate starts with having good credit. Now, there are many agencies out there . that do monitor your credit; however, they’re not very accurate. So, it’s always good to have your mortgage company check your credit for accuracy. Also, if we see potential to increase your scores, we’ll give you some of those tips when we meet.
I know that you can buy down your rate. Can you elaborate on what exactly that means?
Yes. Buying down your rate is actually buying discount points. Now, one discount point usually relates to about 1% of your loan amount. This can change your interest rate about an eighth of a percentage. This is something that makes a huge difference over the term of your loan, whether it be 15 years, 20 years, or 30 years. It’s huge savings in interest.
What about down payment. How important is that?
That’s a great point. Now, increasing your down payment has many benefits. Not only will you have instant equity in your home, you’ll also lower your loan-to-value, which also lowers your interest rate. This is a great thing to do because it will also show that bank that you’re at a lower risk, which will also relate to a lower rate.
All right, David. Hit us with one more tip.
Timing. Rates are the lowest we’ve seen in years, so right now is a great time to buy a home.
But what if I have already bought a home and I want to cash in on these interest rates?
Well, you still have a chance. That’s why we have refinances. It’s a great way to lower your rate through a refinance and save thousands.
David, thank you so much for sharing your mortgage wisdom with us today!
As always, if you have any questions at all about the mortgage process or simply want to chat with a Loan Officer about how much home you can afford, give us a call. We’d be happy to crunch the numbers for you.