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How to Get the Best Mortgage Rate Possible?

How to Get the Best Mortgage Rate Possible?

For both the first-time homeowner and homeowners who need to raise a significant amount of money quickly, calculating mortgage rates can be necessary yet confusing business. Just a couple of decimals difference can mean thousands of dollars over the years. It makes sense to do everything you can to understand where these numbers come from, and more importantly, what affects them.

Mortgage Rates Are All about Risk

The easiest way to consider the numbers presented to you is by understanding they are a representation of the risk the lender is taking when giving you money. Lending you money is worth it for the lender because of the potential profits they can make, including the interest you pay on the loan. The higher the risk is, the higher these potential profits for the lender will be.

Of course, there are many other factors involved, like federal limits to nation-wide market trends that are beyond your control. However, we're here to examine those you can control, and these factors can account for hundreds of dollars you can save every year.

What YOU Can Do to Lower Your Mortgage Rate

The rule is simple: the smaller the risk you represent, the lower the interest rates on your mortgage. Here are the most effective things you can do to decrease your mortgage rates:

  • Make sure your credit score is accurate: This goes beyond avoiding missed payments. Errors happen, even in credit risk agencies; get a free report and make sure it's accurate and that nothing was misreported. Identifying and fixing errors will benefit your mortgage application and rates.
  • Choose a higher down payment: Ideally, your down payment should be 20% of the total loan, and every percentage point below this will raise rates.
  • Shorten your loan term: The longer the length of your loan is, the higher the risk. Shorter-term loans (for example, ten years instead of 15) will have much lower rates, but monthly installments will be higher.
  • Explore other loan types: Some loan types come with an adjustable rate, which means future market fluctuations could raise them or lower them. Lenders tend to give much lower initial rates to those willing to take the gamble.

Your Lender Can Be Your Ally in the Quest for Lower Rates

Shopping for a mortgage is one of the most important financial decisions you will make, as it will affect your financial situation for at least a decade to come. Midland Mortgage has been helping people like you since 1982 with our professional assistance and affordable mortgage rates. Contact us now and let one of our mortgage specialists help you find the best solution to meet your needs and budget.

Posted May 04, 2016 by Midland Mortgage Corporation