If you are shopping for a home when mortgage rates are rising, there are steps you can take to help minimize your rates and keep the cost of home purchasing affordable. Here are some ideas to consider.
How to Save Cost Tips
- Get an adjustable rate mortgage (ARM). One possibility is to consider applying for an adjustable rate mortgage. This type of mortgage features an introductory period with an initial low, fixed rate. Once that introductory period is over, the rate becomes adjustable. This idea would be most appropriate in situations where you do not plan to reside in your home for the long term. If you move out before the introductory period expires, you will never have to pay higher rates to live in that home. With the money you save on interest in the meantime, you can invest or pursue other financial goals.
- Pay your mortgage off faster with a shorter term. Another option for saving on interest over the lifetime of your mortgage is to choose a loan with a shorter term. The more rapidly you can pay off your home loan, the less interest in total you will have to pay. Additionally, the interest rate for a loan with a shorter term will typically be lower than the interest rate would be for a mortgage with a longer term. So, you save on interest in not one way, but two.
- Boost your credit score. Something else you can try to reduce the mortgage rates for which you qualify is to raise your credit score before you apply. Homebuyers sometimes overlook this idea, believing that they simply do not have time to make any significant impact on their scores. But there are some quick ways to raise your score, like fixing mistakes in your credit reports, signing up for services like Experian Boost, and reducing your credit utilization ratio.During your consultation, the team at MMS Mortgage Services can offer you personalized ideas for ways in which you could improve your credit score based on your financial situation.
- Put more money down. The more financing a lender needs to provide for you to purchase a home, the higher the risk. To offset that risk, you can simply make a larger down payment. The loan will then be less risky, and the lender can offer you lower interest rates.
- Check into FHA, VA, and USDA loans.There are some mortgage products that are ideal for situations where you may not have perfect credit or the ability to make a large down payment, but are still looking for affordable rates. These include mortgage programs sponsored by government agencies like the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the US Department of Agriculture (USDA).If you qualify for a USDA loan or a VA mortgage, you can purchase a home with zero down payment. While a down payment is required for an FHA mortgage, it will be low if you are eligible. These programs also are flexible with respect to credit score requirements.
- Work with the right mortgage company. Finally, if you want to find affordable rates, you will have the best luck if a dedicated mortgage company is on your side that will put the extra time and resources into making sure you are matched with a suitable home loan.
Your Team at MMS Mortgage Services
MMS Mortgage Services offers a wide spectrum of mortgage products. We have more than three decades of experience helping homebuyers and homeowners to find loan options that help them meet their financial goals. If you are ready to begin, please call (248) 788-0800 to schedule your consultation. We are based in Farmington Hills, and work with borrowers throughout Michigan. We also are licensed to lend in Alabama, Colorado, Connecticut, Florida, Indiana, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, and Tennessee.
