A man travels the world over in search of what he needs and returns home to find it. ― George Augustus Moore Click To Tweet
Buying a home is an undeniably exciting process, albeit a nerve-racking one for those involved. One of the biggest hurdles involved in buying a home? Figuring out the financial aspect of securing that mortgage you’ll need first. Considering that the average American home now costs over $300,000, it’s imperative that buyers not only secure a mortgage, but get a great rate; the only question is how to do that, especially if your financial history hasn’t always been perfect. Whether you’re buying a waterfront luxury home, like the Manalapan residences at 3550 South Ocean or are eyeing the farmhouse of your dreams, these tips for securing a low mortgage rate will have you moving in before you know it.
How To Qualify For The Lowest
Mortgage Interest Rates
Make sure your job is stable before applying
Whether you’re a Manhattan hedge fund manager with dreams of retiring to an Upper West Side luxury building like 200 Amsterdam or a small business owner with their sights set on a modest suburban home, there’s one factor in securing a great mortgage rate you can’t skip: ensuring your job stability before you start the application process. The good news? Even if you’re not pulling six or seven figures at your job, simply being able to prove your job stability is an easy way to make yourself an attractive candidate for low mortgage rates. Fortunately, doing so doesn’t have to mean a huge amount of stress for you: all you need is a tax return, pay stubs, or a letter from your employer indicating how long you’ve been there and how much you make.
Take on some side work
If you have a passion outside of your traditional work, now’s a great time to turn those dreams of making it into a business into a reality. Whether you absolutely love cutting hair, doing makeup, or crafting, those hobbies can quickly turn into a lucrative side business. So, why is this important for those eager to improve their chances of securing a low mortgage rate? One of the biggest factors in getting that ideal mortgage rate is your debt-to-income ratio. And while taking on a side business isn’t an excuse to quit that stable job right before you try to buy a home, having a little extra cash coming in can help you in a major way when it comes to securing that mortgage. This is especially true for families where one member is staying home—that additional income can make you a far more desirable mortgage candidate to lenders, and having some enjoyable, low-stress work to do on a daily basis can brighten anyone’s mood.
Reduce your debt
Whether you’ve got student loans, car loans, or outstanding medical bills, there’s no time like the present to pay them off, especially if you’re looking to secure a low mortgage rate. Instead of starting to look for the perfect house and spending months trying to figure out how you’ll get your finances in order first, give yourself one or two years to really buckle down and save first. Cutting out takeout, making your coffee at home, ditching cable, doing your own hair and nails, and selling some of your old clothes at consignment shops are all great ways to add to your income and make it easier to reduce your debt in the process. The less you owe to others, the more favorably a mortgage lender will look upon you as a candidate, and the more likely you are to be able to secure a low mortgage rate.
Save up for a hefty down payment
If you’re thinking of giving a paltry down payment to save money, think again. If you have a sizeable down payment saved before you start talking to mortgage lenders, you’ll be in a far better financial position in the long run. Even if it takes years to do so, try saving up at least 20 percent for a down payment so that you can secure a great mortgage rate and pay less in the long run. Considering that finances are one of the biggest stressors in modern life, getting to save tens of thousands in interest every year by saving up for that down payment now and getting a lower mortgage rate can benefit you in a major way in the long run.
Do your research
Among the most important factors when it comes to securing a great mortgage rate? Doing your research. Mortgage rates fluctuate from month to month, meaning that taking advantage of the right opportunities can make all the difference in the long run. So keep an eye on lenders’ rates and have some self-confidence going into lender meetings—the perfect home (and the accompanying low mortgage rate) are worth waiting for, after all.
Before you start looking at houses, picking paint, and eyeing carpet samples, it’s time to get your mortgage loan in order. The good news? Armed with the right information, the process can be painless—even fun.