When it comes to home loans, the number one question most consumers have, is how do I get the best interest rate? Interest rate themselves, change daily and vary from lender to lender, so the process of obtaining the best rate is often difficult to pinpoint.
However, there are some basic knowledge points, that if you understand, will allow you to increase your chances of getting a better interest.
Credit Score
Having an excellent credit score is the first way to ensure you can qualify for the best interest rate possible. In general, someone with a 620 credit score will receive a worse interest rate than someone with a 760 credit score.
It’s important to monitor your credit score for inaccurate items that are reported, make all payments on time and keep all credit card balances, below 50% of their limits. If you do nothing else, but those three things, your credit score will be better for it.
The Amount Down Payment or Home Equity You Have
When purchasing a home, the larger the down payment you have, in general, the lower your interest rate will be.
Past a certain point, the down payment amount doesn’t matter, but if you put a 25% down payment, you will almost always get a better interest rate, than say a 3% down payment.
The same goes on a refinance, the more equity you have in a home, the more advantageous your interest rate generally is.
Your Home Type
If you are obtaining a loan for a property you will occupy as your primary home and is a single-family residence, you should receive a better interest rate, than investment property condominium.
Home type matters for interest rates, with interest rates for primary and secondary homes being lower than investment homes. And even single-family homes rates being lower than condos, in some instances.
Where You Get Your Loan
Finally, and perhaps most importantly, interest rates and fees, vary from lender to lender. You might go to different mortgage companies and be offered drastically different interest rates. So, at the end of the day, it’s important to have trust in who is providing you the quote for a home loan interest rate. Do your due diligence to ensure you are receiving a fair market interest rate and look for a referral to a trusted professional work with.
As always, everyone’s situation is unique and to properly look into your specific situation, make sure and consult with a licensed local lender such as Strategic Mortgage to fully look over your complete situation.
For more information on current home loan programs and options for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
Strategic Mortgage, LLC – AZBK#0909514 - NMLS#158804 - Equal Housing Lender
Vasilios Kamboukos – NMLS#160440
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