Friday, May 25, 2012

How to Get the Lowest Mortgage Interest Rates

Interest RatesInterest Rates (Photo credit: 401K)This week the average interest rate on a 30 year mortgage dipped below 4 percent. This is only the second time in history this has happened. With these kinds of interest rates your home refinance options just got a lot better

Mortgage lender Freddie Mac said the rate on the 30-year fixed loan has dropped to 3.87 percent. Six weeks ago, it dropped to a low of 3.93 percent, according to the National Bureau of Economic Research. The 15 year fixed rate mortgage fell to 3.04 percent. The National Association of Realtors reported a 3.4 percent increase in sales of existing homes in April and more homes on the market for potential homebuyers to see. The low rates also continue to support your home refinancing options.

What can be done to help you get the lowest mortgage interest rates?

Even though mortgage rates are at such a low interest rate it doesn't mean you will get these rates. It depends on your credit score among other things. You can get the best rate mortgages if you prepare.

1. Make sure you have a great credit history.

Being maxed out on your credit cards is a certain way to bring down your credit score. Paying down your debts will help in raising your score. Before applying for the new mortgage it is best to check your credit report. Occasionally errors can get into them. You have the ability to clean up the errors. You can dispute the errors and if the credit reporting agency can't prove the item, then by law they have 30 days to remove it. After you fix your credit report, be sure to wait a couple months so your score can return to a higher level.

2. Make sure to have cash in the bank.

Whenever you apply for a mortgage the lender always asks what your balances are in your checking, savings, and investing accounts. Having money in these accounts shows the lender that you are responsible; it shows you have the ability to save and hold on to your money. It tells the lender that you are a good risk and will get you a lower interest rate.

3. Be a smart consumer.

Being a smart consumer means shopping around for the best mortgage deal. Start on the Internet to locate the best mortgage companies. There you can compare many loans in a short period of time. Don't be afraid to call these companies on the phone and try to get a better deal. A lower interest rate or more favorable closing costs will save a lot of money.

Don't rush into getting a mortgage. If you do a little shopping around you could save yourself a lot of money. A lower interest rate or fewer points will save you money over the life of the loan, keeping more money in your pocket.

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