Are you in the market for a new home or looking to refinance your current mortgage? If so, you’re probably wondering how to score the best mortgage rates in 2021. With interest rates at historic lows, now is the perfect time to lock in a great rate on your home loan. In this blog post, I’ll share some insider tips and tricks on how to secure the best mortgage rates available.
1. Improve Your Credit Score
One of the most important factors that lenders consider when determining your mortgage rate is your credit score. A higher credit score typically means a lower interest rate, so it’s essential to keep your credit in good shape. To improve your credit score, make sure to pay all of your bills on time, keep your credit card balances low, and avoid opening new lines of credit.
2. Shop Around for the Best Rate
Don’t just settle for the first mortgage rate you’re offered. Shop around and compare rates from multiple lenders to ensure you’re getting the best deal possible. Websites like Bankrate and LendingTree make it easy to compare mortgage rates from different lenders and find the best option for your specific financial situation.
3. Consider a Shorter Loan Term
While a 30-year fixed-rate mortgage is the most common choice for homebuyers, opting for a shorter loan term, such as a 15-year fixed-rate mortgage, can sometimes result in a lower interest rate. While your monthly payments may be higher with a shorter loan term, you’ll pay less in interest over the life of the loan and own your home outright sooner.
4. Make a Larger Down Payment
Lenders typically offer lower interest rates to borrowers who make a larger down payment on their home. If you can afford to put down 20% or more, you may be able to secure a lower interest rate on your mortgage. Additionally, putting down a larger down payment can help you avoid paying private mortgage insurance (PMI), which can add to the overall cost of your loan.
5. Consider Buying Points
When you buy points on your mortgage, you’re essentially paying upfront to lower your interest rate. Each point typically costs 1% of the total loan amount and can lower your interest rate by 0.25% to 0.5%. While buying points can result in lower monthly payments and overall interest costs, it’s essential to calculate whether the upfront cost is worth the long-term savings.
Conclusion
Scoring the best mortgage rates in 2021 is possible with a little know-how and some strategic planning. By improving your credit score, shopping around for the best rate, considering a shorter loan term, making a larger down payment, and buying points, you can secure a great interest rate on your home loan. With interest rates at historic lows, now is the perfect time to take advantage of the market and save money on your mortgage.
FAQs
- What are the best ways to improve my credit score?
- How can I shop around for the best mortgage rate?
- Is a shorter loan term always better for securing a lower interest rate?
- What is PMI, and how can I avoid paying it?
- Are there any downsides to buying points on my mortgage?
