7 Steps to Lower Mortgage Rates

In this article

1. How Do You Go About Getting the Lowest Mortgage Rate?
2. 1. Improve Your Financial Situation
3. 2. Increase Your Credit Score
4. 3. Pay Down Debts
5. 4. Have a Steady Income
6. 5. Save Up for a Down Payment
7. 6. Shop Around
8. 7. Listen and Learn

Are you buying a home in the Atlanta area or looking to refinance your current mortgage loan? Maybe you are considering cash-out refinancing to tap into some of your home equity. Whatever your home buying or refinancing goals, you are hoping to lock in the lowest possible mortgage rate on your loan. Lower mortgage rates mean lower monthly mortgage payments and less interest paid over the life of your home loan. 

Getting a lower mortgage rate should be a top priority for any home buyer or homeowner hoping to refinance. 

How Do You Go About Getting the Lowest Mortgage Rate?

Here are a few smart steps to follow:

1. Improve Your Financial Situation

Mortgage brokers and mortgage lenders will review your entire financial situation when determining your eligibility for a mortgage loan. A stronger financial standing will definitely help you qualify for a lower mortgage rate. The steps that follow will definitely make a big difference.

2. Increase Your Credit Score

Your credit rating (aka FICO score) will play a large part in determining your mortgage rate. Take steps now to improve your credit score. Make sure you are making bills and debt payments on time (sometimes paying early can boost your credit score). There are all sorts of tips and tricks out there that can make a difference.

3. Pay Down Debts

A higher debt-to-income ratio (DTI) will affect your mortgage rate eligibility. Work to pay down your existing high-interest debts like credit card balances, student loans, car loans and personal loans. Reducing your debt can help you qualify for a lower mortgage rate.

4. Have a Steady Income

A strong employment history and steady income will be beneficial to you when applying for a mortgage loan. Mortgage lenders want to see that you can afford your monthly mortgage payments and that you have a solid financial history. Self-employed borrowers will need to display consistent income sources and may need to provide additional documentation to show proof of income.

5. Save Up for a Down Payment

Your down payment will be another very important mortgage qualification factor. The more you are able to put down toward your home, the better your mortgage loan terms will be. There are many loan programs that allow for lower down payments (FHA, VA, USDA, conventional), and you can also look into downpayment assistance loan options (also known as “bridge loans”). However, you are still better off applying for a larger down payment if you can. This will reduce how much you owe and can greatly reduce your mortgage rate. A higher down payment can also reduce (or eliminate) how much additional mortgage insurance (PMI/MIP) you need to pay each month.

6. Shop Around

Assuming your finances are in order and you are ready to apply for a mortgage loan, you will want to talk with multiple mortgage lenders and mortgage brokers to find someone you trust to guide you through the home buying or refinancing process. Ask a lot of questions and make sure you feel comfortable working with them. Understand the differences between a direct lender (bank) and a mortgage broker, who can actually shop around on your behalf and perhaps give you access to more loan solutions.

7. Listen and Learn

Once you have decided who you want to work with, spend time talking with your loan originator. Soak up as much information as you can to make smart decisions. Again, ask as many questions as you need to understand the process and address all your concerns. Let them know your financial situation and your home buying/refinancing goals. The stronger relationship you can build, the smoother your mortgage loan will go. They can provide more customized solutions and find an option that best suits your needs and goals. If they aren’t willing to answer your questions or you don’t feel like they are truly working with your best interests in mind, feel free to take your business elsewhere.

These are some of the key steps you can and should take when preparing to apply for a mortgage loan, whether it’s a new home purchase, refinance or cash-out refinance. In the Atlanta area, contact Moreira Team | MortgageRight today and consider our team as one of your lending guidance options. Let us show you what we can do for you as a leading local mortgage broker.