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If you are about to apply for a home loan program, then you are eager to find the lowest mortgage rate – the interest that you pay over the life of the loan. The higher the rate the more you need to pay while with a lower rate, you can save a considerable amount over the course of the loan.
But how to get the lowest mortgage rates in Houston? Well, before you start shopping for a loan focus on these things. Following these steps will help you to get the lowest mortgage rate for a home loan program.
- Increase your credit score
Increasing your credit score will always work for you when you want to ensure the lowest rate for your home loan program. The higher your credit score would be, the more confident that the lender is in your ability to repay the loan on time, so the lender will be ready to lower the interest rate. To improve your credit score, pay your bills on time and pay down or eliminate those credit card balances. In case, you carry a balance, make sure it is no more than 20 percent to 30 percent of your available credit limit. Besides, check your credit score regularly and look for mistakes. If you find any, work on to clear them up before you apply for a home loan program.
- Lower your debt
Paying bills on time, as well as paying down your credit card balance can lower your debt-to-income ratio or DTI, that improves your possibility to get approval for the lowest mortgage rate for a home loan. A good rule of thumb is to ensure your debt-to-income ratio is no more than 36 percent, and it would be better if it is lower than that. Don’t make any major purchase or fill out multiple credit applications before you apply for a loan.
- Save for down
Saving more money for down can help you get a lower mortgage rate, especially if you have enough cash to fund a 20 percent down payment. There are lenders who accept lower down payments, however, coming with down that is less than 20 percent means you need to pay private mortgage insurance. Besides, there will be less possibility to get la ower mortgage rate for a home loan program. So, you should try to save as much as possible for the down of the home loan program.
- Talk to multiple lenders
The mortgage rates offered by lenders vary. When a lender offers a higher mortgage rate to you, another one may be ready to offer a lower mortgage rate, and as a result, you can save a lot. So, in place of getting a quote only from the lender, you come in contact with, ask for quotes from various mortgage lenders and compare them. It will give you a clear idea about the highest, lowest and general mortgage rate. And then you can pick the lender, who is offering the lowest rate.
So, boost your credit score, lower the DTI ratio, save for down payment and shop for lenders to ensure the lowest credit score for a home loan.