Mortgages are debts that are paid back every month over a long period. However, no one wants their monthly payment or interest rate to be greater than they need to be. That’s why it’s crucial to get the best mortgage rate. Here are a few tips to help you get the best possible mortgage rates.
Mortgage lenders have different rates and qualifying requirements. If you get a quote from one lender, you could be missing out on the chance to get the lowest rate. Try to get mortgage quotes from two or more lenders. The more mortgage quotes you get from lenders, the more confident you will have that you’re getting the best deal.
Improve your credit
Mortgage lenders only offer well-qualified borrowers the best rate. A credit score of 720 and above can help you get the best mortgage rates. If you want to improve your score, there are several steps you can take to boost your score. You can ask your creditors to remove negative information, try to pay down debt, correct errors on your credit report, or ask someone with excellent credit to include you as an authorized user on their credit card. Before applying for a mortgage loan, taking any of the steps listed above will help you get the best mortgage.
Reduce your debt-to-income (DTI) ratio
Your “debt-to-income ratio” is crucial metric mortgage lenders use when evaluating applications. Lenders look at your DTI to see if you’ll be able to pay your monthly payment. DTI measures your monthly obligations and compares them to how much money you make. A higher debt-to-income ratio of 43% or higher could mean you’re likely to struggle with mortgage payments. Consider paying off any loan you have before applying for a mortgage or spending some time reducing the balance on your credit score to get the best rate.
Make at least a 20% down payment
Some mortgages let you buy a home with a small down payment. If you put less than a 20% down payment on a property, then you’ll be required to buy private mortgage insurance (PMI) and pay a monthly premium as part of your regular mortgage payment. PMI protects your mortgage lender should you fail to make your payments. Therefore, making a 20% down payment can help you save money down the road because PMI represents an additional cost.
Choose a shorter loan length
A 30-year mortgage is common among homeowners, but you have other options when it comes to the length of your mortgage loan. Mortgage lenders offer 10-year or 15-year mortgages. The shorter your mortgage length, the higher your monthly payment, but you’ll get lower mortgage interest rates. You’ll be able to save money with a shorter-term length if you can afford the higher monthly payment.
Contact Mortgage Design Group Inc.
If you are looking to get a mortgage in Alberta, contact Mortgage Design Group Inc. to get the best rates in Alberta. You can give us a call at 403-942-4099.
Lethbridge AB T1K 7B4