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Before applying for a mortgage, you should consider what affects your interest rate and how to get it as low as possible. After all, the mortgage interest rate creates a domino effect—the lower your rate is, the lower your monthly payment will be, the more house you can afford, and the happier everyone will be in a bigger home.
There are certain strategies for lowering your mortgage interest rate. Check out the four most essential areas to consider:
Your credit score is a huge determining factor for how low your rate will be. The higher your score is, the lower your rate will be. Improving your score can be easily accomplished by paying your bills on time and paying down your revolving credit.
The more money you put down the lower your rate can be. The more money you have as reserves after closing can help reduce your rate too.
Mortgage points are fees paid to your lender in exchange for a lower interest rate. You can buydown your interest rate by paying an extra point or two. One point is equal to 1% of your loan amount.
The great news is if your rate is higher than the current market rate you have the option to refinance at most any time. The only restriction is on VA and FHA you must wait for 6 payments to pass before you can refinance.