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One of the things that homebuyers are concerned about when getting a loan is interest rates. The good thing is that there are ways that buyers can reduce the amount of interest that you pay over the life of your loan. The secret lies in securing a lower interest rate upfront. Today, I’m going to share with you four strategies to consider if you are looking to get a lower interest rate and save money:
1. Boost your credit score. Higher credit scores lead to greater lender trust and, thus, access to significantly lower interest rates. There are typically five factors that lenders use to assess your creditworthiness: payment history, credit utilization ratio, length of credit history, credit mix, and new credit inquiries.
2. Compare lenders. Do not settle for the first offer that you receive. It’s okay to compare rates from different lenders. You will see that some lenders will do a CMHC-insured mortgage, while others won’t. If your lender is CMHC insured, your rates will be lower because the lender is guaranteed to get the payment.
3. Increase your down payment. The typical amount for a down payment is 20%, but increasing your down payment to a higher percentage, like 30% or even 50%, might get you a lower interest rate.
4. Rate buydown option. This option allows you to repay some of the interest on your loan upfront, resulting in a lower monthly payment over the life of the loan. The cost of the buydown can be negotiated with the seller, mortgage broker, or even yourself. Negotiating a rate buydown with your mortgage broker can be particularly beneficial.
Dealing with the financial aspect of home ownership can be quite overwhelming, but we are here to help. If you are looking for more information, we have the best partners in the industry who can assist you in improving your credit score, making the home buying process smoother. Give us a call or send us an email today! We’d love to help you get the best interest rate for your loan, especially in today’s real estate market.