With the current average rate on 30-year fixed mortgages being 4.40%, home loans are now extremely affordable. Still, there is always a way in which you can get an even lower interest rate and better terms and conditions. Discover 5 proven techniques which will help you to get a super cheap loan and to enjoy great savings in the long term.

1. Perfect Credit History

Mortgage applicants who have no blemishes on their credit records and who use loans and credit cards wisely have the best chances of securing a cheap loan. Lenders find them to be more reliable borrowers and reward them with lower interest rate. If you want to take advantage of this opportunity, you need to have any errors on your credit record fixed first.

You have to pay all your bills on time every month. Make sure that you do not use more than 30% of the limit on your credit cards. You should not apply for new cards or loans in the period before applying for a mortgage.

All of these techniques will help you boost your credit score. Your score has to be at least 720 in order for you to secure one of the best home loans available at present. Currently, lenders are lowering their credit score requirements, but a higher score still earns lower interest rate.

2. Low LTV Ratio

The loan-to-value (LTV) ratio measures the loan amount against the value of the property purchased. The lower this ratio is the lower the mortgage amount is. In order to achieve lower LTV ratio, you need to place a larger down payment. LTV ratio which is lower than 80% would be great. You will save not only in interest rate payments, but on mortgage insurance as well.

3. Strategic Planning

This tactic is all about choosing the most affordable type of mortgage loan for you. Generally, the adjustable rate loans have lower initial interest compared to their fixed-rate counterparts. However, after the period, during which the low rate is kept fixed, expires, you will most likely face a higher rate as there is an upward trend at present. That is why securing a fairly low interest rate which is fixed for the entire period of the loan seems to be the more cost-efficient strategy currently. Still, if you plan to sell the property or to achieve higher credit score and refinance in the future, an adjustable rate loan may be the right solution for you.

4. Comparison Shopping

This is a strategy for getting a cheap mortgage which any home buyers can use irrespective of their credit score, down payment or income. It is effective and can save you a lot of money. All you have to do is to obtain as many quotes as possible from as many lenders as possible. Look for the lowest interest, lowest monthly payment and lowest total cost.

5. Employment Security

Applicants who have been working for the same employer for at least two years have the highest chances of securing a cheap home loan. In general, the more stable the income of the applicant is the better the loan terms will be. As usual, the people who are self-employed are considered to be riskier borrowers and can expect to be charged higher interest rate.

Use all of these strategies for getting a cheap mortgage.

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