How to Pick the Best Fixed Mortgage Deals
Buying a home is one of the significant financial obligations in life. For most Americans, getting a mortgage is the only convenient way to be a homeowner. Unfortunately, there are so many things that lenders consider when reviewing loan applications from borrowers. Some of these factors include credit score, credit history, mortgage points, income, and loan amount. The good thing is that the interest rates have been dropping from 10.32 percent in 1989 to 3.65 percent in 2016. As of 2018, the rate offered by many lenders averages at about 4.5 percent for a 30 year fixed reate mortgage. But still, it makes sense for some new home buyers to find the right mortgage that suits their needs. Here are killer tips for getting the best fixed mortgage deals when considering buying a home.
Let’s dig into them!
Take this way; purchasing a home is a goal. It requires planning, saving and making the right due diligence. It’s not an undertaking that you can expect to land the best deal with a single shot.
1. Early preparation helps
Moreover, mortgage rates are dynamic thus tend to change almost dramatically and unexpectedly.
First, you need to get your financial life right. Get it into shape before making your first move.
Your credit score needs to be outstanding. Lenders usually consider borrowers who have a score of at least 700. For a prime mortgage rate, think about getting a score of 740 or above.
The Federal Housing Administration may have relaxed standards, but their conditions are strict. Try as much as possible to pay off those credit card balances and personal debts.
Additionally, save as much as you can, so that you can put down a significant amount. Typically, the higher your down payment, the lower your mortgage payment and the less interest you will pay over time.
When you are ready, make your move.
2. Compare the best fixed mortgage deals
However basic it may seem, comparing rates from different lenders is still an important tactic for those who want to uncover the best deals.
Keep in mind that lenders are eager to attract as many clients as they can, so it’s obvious that they will be making their rates irresistible and compelling.
In most cases, when working with a real-estate agent, they are usually swift to close the deal. If you are a first-time buyer, trade carefully and don’t be hasty to accept the first recommendation you get.
You can use an online mortgage rate calculator to find the best fixed mortgage deals. Compare all the top lenders and find out one that you feel is the right choice.
Take ample time to review each lender’s rates before you finally settle for your preferred option.
3. Get help if necessary
If you are new to this whole fixed mortgage thing, it won’t hurt to get help from friends, colleagues or family members.
You must have at least three or more people in your life who have already purchased or refinanced a home using a fixed-mortgage, right? Such people can be helpful in pointing you in the right direction.
They can share their experience on the lending process and give insights into finding the best deal. You can also understand their mistakes, if any, and find ways to make sound decisions.
Approach different lenders if possible and let them recommend a lender they think will be ideal for your unique situation.
4. Understand private mortgage insurance
If your down payment sum is less than 20 percent of the borrowed amount, your lender may need you to get private mortgage insurance or PMI. In such a situation, the lender sees you as a higher risk.
With a PMI, you are a safer bet for the lender, but the problem is that you are responsible for paying for the insurance.
Luckily, there is good news. You can kick the insurance in the face and get rid of it.
Strive to accumulate enough equity in your house by making full and timely mortgage payments. Experts recommend paying your mortgage balance up to 80 percent of the appraised home value.
At this point, your lender has no choice but to eliminate the PMI.
5. Watch out for hidden fees
Getting the best fixed mortgage deals is a time-consuming affair, and there are a few hurdles on the way.
Be wary of those low advertised rates; there is always a catch. Don’t just fall for them because of what they promise.
Take ample time to break down the closing costs before picking any lender. Always strive to give the lender all the necessary information upfront to allow them to give the best possible quote.
Closing costs generally account for 2 percent to 5 percent of the price of your home. For example, if the price of your home is $150,000, the closing costs can range between $3,000 to $7,500.
That’s a significant sum, so it helps to know what your lender charges. Watch this great ex-plainer video that does an excellent job of explaining the loan origination process and to learn all about closing fees and costs.
Watch This Video To Completely Understand Loan Program Fees
6. Make your decision
At this point, you have listed down some of the best fixed mortgage deals you have found. That’s pretty great.
So, you should try narrowing down to that single lender that appears suitable for your particular situation. Of course, you should consider all their cost and terms.
Also, don’t be fooled by the points even though they boost your closing costs. They can be a good idea if you will be staying in your home for a long time.
It is also an excellent idea to price out different lenders at the same time. This will allow you to get the best comparison possible.
Consider all the different loan types, including 30-year fixed, 15-year fixed and 5/1 ARM, and determine what suits your financial state. The 30-year fixed option is the most expensive plan because it has the highest rate and you are paying for an extended time.
Ideally, you need to choose an option that suits the period you intend to stay in your house.
Enjoy your new home
The overall idea is that getting the best fixed mortgage deals requires time and efforts. They just don’t come to you.
Shop around to land the best rate and make the right moves. Remember, you need to prepare well enough before applying for a mortgage.
Don’t overpay for your mortgage and don’t pay for a plan when you don’t need it.
When you finally close the deal, sit back and enjoy your accomplishment.
A start of a new life!
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