A mortgage’s interest rate is the most important variable to consider when financing a new home. The percentage of your loan that you pay in interest could mean the difference between spending a thousand and tens of thousands more than your real estate investment’s sale price. As a result, you should take every step you can to get a low interest rate. Here are four ways to get started:
1) Pay off Your Debts. Your credit score is probably the most important factor in calculating your mortgage interest. As a result, you should take every step you can to maximize it before applying for financing. The quickest way to give your score a much-needed boost is to pay off any outstanding debts you may have. You may have to make some sacrifices to pay off your bills, but it will be worth it in the long run.
2) Stack Your Accounts. If you’ve got some money you’re keeping out of the banks, now’s a good time to pad your accounts with a temporary deposit. Lenders will take a close look at your finances before approving your interest rate, and the more money you have available to show them, the better.
3) Borrow as Little as Possible. Another major variable in determining the interest for your home loan is the size of the loan itself. Homeowners who borrow less are more likely to get a favorable interest rate, so try to put as much of your own money as you can towards the purchase of your real estate investment.
4) Build Good Credit. Even if you don’t have debts that you need to pay off, your credit score can always afford to be higher. The best way to build a good credit rating is to swipe your card as often as possible and pay all of your bills on time. Spending frequently without carrying a balance for a few months will do wonders to the interest rate lenders offer you on your mortgage.
The steps you need to take to reduce your mortgage interest aren’t just healthy for homeowners – they’re a good idea for everyone. If you’re buying a house, you should prove to lenders that you’re a responsible consumer. When you do, you won’t just save money on your mortgage, you’ll save money for the rest of your life.
