By Centum Interstate Mortgages Ltd.

12/09/2013 With the interest rates fluctuating every now and then, anytime is a good time to buy a house. If you’re new in the market to buy a new home then you should understand that mortgage rates are determined by a lot of factors. Everybody needs a low interest mortgage. You can get one too, if you have a good credit rating, a steady job and a microscopic debt. With such attributes associated to you, the lenders will definitely take keen interest in you to give you a good deal.


However, there are more things linked up to mortgages. Following are some worthy tips from ‘Interstate Mortgage professionals’ that people apply to get a great deal:


1. Negotiate Closing Costs
A closing cost is a fee that one pays when he/she takes a loan. Closing costs could be anywhere between 3 to 6 percent of the total amount of loan. These costs also include:


• Application fee
• Loan origination fee
• Appraisal fee


Rarely do people know that they can save on these costs if they negotiate with their lender. All they need to do is to pick up a ‘seller concession’.


A seller concession will not only cover closing costs but will also lower the interest rate on your loan. To reduce the interest rate, you actually ‘buy down’ the interest rate i.e. you agree to shell out a certain amount of money beforehand in order to reduce the interest for the whole loan term. How much you can ‘buy down’ your interest rate will vary from lender to lender.


2. Lower Your Debt-to-Income Ratio
Lenders will only lend you money if they are confident enough that you will repay. If you are unable to impress them, then forget it. They need to make sure that you will pay their monthly installments comfortably without turning out a defaulter.


For that, they’ll have a close glance at your debt-to-income ratio. It compares your debt with your income. This includes long-term debts like car or student loan payments etc. Once they review your finances, they will calculate the ratio for you. If you have a low ratio, then you will be awarded with a lower interest rate.


Hence, it is highly recommended that you lower your debt-to-income ratio. You can do it by paying down any existing debt (like credit cards). This will not only improve your ratio, but it will also help to improve your credit score.


3. Get a Short Term Mortgage
Another way to get a low rate mortgage is by applying for a short term loan. Shorter-term mortgages, like a 15-year mortgage, will have lower interest rates as compared to a 30-year mortgage.


Getting a lower interest rate from a short term loan is a good idea to save money. However, you must remember although the interest rate gets lower, but the monthly payments rise. So, you need to be confident enough about the payments when going for a short term loan.


4. Research, Research & More Research
Today’s mortgage industry has become very competitive. Learn to take advantage from it. Don’t bite your nails in front of the lender, stay confident. The lenders will agree to negotiate, if you show them that you could go elsewhere for your loan.


In order to land on the best deal, compare mortgages from different lenders. Do your market research well and compare all related terms like – interest rates and costs. This will definitely help you to save you thousands of dollars.
Be prepared. Carry updated copies of your credit report. Once you choose a lender, lock the best deal. Read all the written documents thoroughly, so that you don’t get any awful surprises.