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Four Tips for Getting the Best Home Loan Rates

by Alice C. Woodhouse
June 02, 2009
Home loans are necessary to be able to purchase the home of your dreams. Here are top tips to snag the best rates from lenders:

1. Check the Lender's Requirements - the more you surpass the bare minimum the better. Review both your credit score and rating. Take a long look at your credit rating and see if you have a credit score of around 700, as lenders tend to give higher rates to those applicants with at least a 720 FICO credit score. Your employment history will also be examined to see if you meet the minimum requirement. You need to have been with in the same company or employer for at least two years. Lenders will also ask you how much money you have for the down payment, and the higher the amount you can present in your savings, the better your chance to get the best deal on their rates.

2. Improve Your Credit Score - Are you worrying that your credit score is too low? You better think twice about applying for a home loan as of now. It's much better to work on building a better rating by looking at your other loans and credit card debt and making adjustments on how you can pay it regularly. Regularly putting in money, making payments on time, and not closing credit accounts helps you in getting good marks in your credit report.

If you recently applied for other loans and credit, it will show up as well and it's not going to get you in a good standing with the lenders. All your inquiries and application can be a reason as to why lenders might hesitate in giving you a better rate; and worse, it might be a reason to turn down your application.

3. Multiple comparison shopping gets you the best rate from competing lending companies. Go online and search for websites that offer 3-6 loan rates for you to compare and consider. One leading resource is LendingTree that helps applicants search for the best rates among various companies.

Always be on the lookout for unexpected fees that might spring up in your quest to find a good mortgage rate. It's advisable to head off online first before you visit any offices (You can save money this way too.) Read their FAQ on applying for a loan and watch out for the fine print.

4. The down payment amount is incredibly crucial. You can never go wrong with the highest amount you can rake. Save up as much as financially possible before you think of getting mortgage. Getting the best home loan rate is not going to bode too well if you're unsure if you can manage to pay the mortgage you take out. It's important that you have cash for every purchase you make, including buying a house. The higher the money you save for down payment, the lesser the loan you're going to borrow, the more you save on the interest and more you'll feel that your mortgage is something you'll be able to pay off in the future.

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Four Tips for Getting the Best Home Loan Rates




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