Taking the step to buy your own home can have a number of hugely beneficial effects for your life. Whether you’re looking to start a family or you simply want to have your own space for a library, kitchen, and the like, owning a home can make those things far easier than living in an apartment.
That said, a home represents a huge investment that will follow you for decades. As the latest statistics from the U.S. Census Bureau show, the average American will spend nearly $273,000 on a new home, and that’s just for the home itself. You’ll also have to factor in your mortgage and the banking rates placed upon them. If you’re thinking of buying a home this year, here are four things you can do to find the best mortgage rates, keeping the cost of your home as low as possible.
- Arm Yourself with Knowledge
- Plan Way Ahead for Your Mortgage
- Take Advantage of the Competitive Marketplace
- Choose the Shortest Option You Can Afford
For the popular financial website The Simple Dollar, one of the best things you can do to secure the best home mortgage rates is educate yourself. What are the best banks in your area for new homeowners? What sort of rates should you reasonably expect? With a little bit of research, you can arm yourself against the more usurious lenders out there.
Many Americans buy into the myth that you need to put 20% down on a home to buy it. That’s not always true, but you still need to plan ahead, both to ensure you can afford whatever down payment is required and to make sure you get the best mortgage rates possible. BankRate.com suggests that you should save up whatever you can leading up to your home purchase, thereby avoiding a larger loan than is necessary. Additionally, by planning ahead, you can clean up any bad spots on your credit report. Since you need a credit score of at least 740 to get the best rates, taking this proactive step can only help you, even if it is a pain.
Too many people make the mistake of going with the first bank that offers them a loan. As Fox Business News highlights, though, you really should be shopping around, comparing the rates each option offers. At the end of the day, lenders are just like any other business; if you put lenders in a position where they need to compete for your business — making their rates more competitive — they will do exactly that.
Repayment terms for mortgages vary greatly. 30-year mortgages are certainly the most common, but there are also 10,15, and 20-year options. To get the best rates and save the most money, you’ll want to choose the shortest option you can afford. Banks will typically offer a lower rate on 10-year options, for instance, than on 20-year mortgages.
Are you a homeowner with a lot of experience hunting down the best mortgage rates? What are some of the tips you’d give to others? Let us know in the comments below.