Going for a mortgage loan when you want to buy a house or renovate the existing one is a natural choice if you don’t have ample money.
But you must be very cautious because a meager fraction of a percentage in interest rate can increase thousands of dollars over 15 or 30 years. Therefore, it would be best if you did your research by taking the easy-to-follow steps and measures.
These takeaways mentioned below will help you cut the best deal for the mortgage loan to save you a handsome amount over the period. Your friends or family members might persuade you to make a deal with their lender, but there is no guarantee that you will also get the same thing in different circumstances. The advertised rates are never the true picture that you were looking for. Do your research and never be afraid of negation. If you want to know how? Read along and know the 5 steps that will help you cut the perfect deal for low mortgage rates.
The 5 steps for getting low mortgage rates
Comparing the interest rates of different lenders is not the only thing that you should do. You need to be financially intelligent and make strategic moves to get a perfect deal that will help save you thousands of dollars. Here are the steps to take for this endeavor:
Never Fall for Advertised Rates
You can find the mortgage rates of different lenders online. Then, within 5 minutes, you can compare all of your prospect lenders and save the day. But this is not the case. Unfortunately, these rates are for perfect buyers. For lenders, a perfect buyer has a great credit score, is willing to pay at least a 20% down payment, and has low debts. If you are such a person, this strategy is good for you, but you should never fall for this approach if there are some deviations.
You should go for three to five reputed lenders to get quotes on the property of your choice. You will need to provide your personal information, credit score, recent pay stubs, and ID. The lender will also require a bank statement of two to three months. All the documents and the value of the property of your choice will help the lender to offer you a mortgage rate that will be entirely different from the advertised one.
Wait for Response from All the Lenders
If you get the quote of a lucrative rate from a lender and still some of the quotes are in the pipeline, you should wait for a little. For example, when you get a 3% mortgage rate of $300,000, the monthly payment will be $1390. If another lender offers you 2.75% for the same loan, your monthly installment will be only $1350. From this quotation, you will see that a $40 difference is nothing much that should persuade you for this difference.
But when you calculate the interest for 30 years, you will see that you will be paying $155,300 in interest on the first quotation. On the other hand, the latter option with 2.75% will make you pay $140,900 over thirty years. Thus, the $14,400 difference is significant enough to persuade you and change your decision towards the mortgage plan of 2.75%.