Most tips for attracting low mortgage rates are only suitable for long term strategy. For example, the most common tip is to maintain good credit and a solid history of employment. However, such tips won't help you if you want to buy a home now and are faced with high mortgage rates. Fortunately, there are some tips that you can use to get low rates now. Here are a few of these tips:
Avoid Extremely Small or Big Loans
Mortgage lenders use mortgage rates to do two things — protect their money and make a profit. This means that if you are applying for a small loan, say a hundred thousand dollars, then your rates are likely to be on the higher side so that the lender can still make some profit. On the other end of the scale, if you are applying for a gigantic loan, say over half a million dollars, the lender may also raise your rates to protect their investment since such an amount represents considerable risk to them.
This means that to attract the best rates, you need asking for a loan that is neither too low nor too high. This may require you to increase your deposit amount if you are buying an expensive house.
Reduce Your Mortgage Repayment Duration
Some mortgages can be repaid for as long as 30 years. This is a long time, and anything can happen; you can lose your job or the economy can tank and make it difficult for you to service your loan. Lenders know this, which is why they offer incentives to borrowers who shorten their mortgage terms. The incentives take many forms, with reduced rates being one of them. This is why a 30-year mortgage is likely to attract higher rates than a 15-year mortgage.
Set Up Automatic Mortgage Payments
There are various ways of making mortgage payments. One method favored by many lenders is the use of automatic payments. In this case, you instruct your bank to withdraw the mortgage payments from your account on a specified date every month. As long as there is money in your account, you don't have to do anything else to pay your mortgage. Some lenders will reward you with low rates if you opt for automatic payments since it assures the lender that they will always get their check.
Therefore, don't settle for high mortgage interest rates; there are several things you can do to attract low rates. Your real estate agent may help you with more tips on the same.