Every buyer faces can face challenges along the road to homeownership. A mortgage is a significant undertaking. You’ll want every opportunity to simplify the process and lessen the cost burden during your purchase. Interest rates are a key factor in the affordability of a property. A reduction of a few percentage points can save you tens of thousands of dollars over the course of your loan. There are a variety of steps you can take to reduce your rate. If you want to get the best mortgage rates in York PA, here are 8 steps you can take,.
The first thing that you should do before taking on a mortgage is to consolidate your credit score. You can start by checking your credit score for inaccuracies that are decreasing it and dispute those claims and make an appeal. If your credit score is below 760, consider paying off your balances and making sure that you make your payments on time before taking out a mortgage loan. Anything you can do to improve your credit score will significantly be reflected in your mortgage interest rate.
Decrease Your Debt, Increase Your Income
As with improving your credit score, decreasing your debt and increasing your income will improve your debt-to-income ratio, thus making you less of a risk to your lender. Pay off balances, limit your spending, and if possible, increase your income. While this may be easier said than done, lowering your mortgage rates in York PA will end up saving you dividends over the life of your loan.
Apply to Multiple Lenders
Mortgage lenders are in competition with each other and will offer you different mortgage terms and rates. For this reason, it is recommended that you shop around and apply to different lenders. Compare the estimates of a minimum of 3 lenders to see which rates and terms would benefit you the most. The main factor to consider is the length of the loan you’re looking to secure. For a long loan, you will want lower rates and if you plan on taking out a shorter loan, you will want lower closing costs.
In short, the more amount of money you put down as a downpayment, the less your mortgage rates in York PA will be. If you decide to put less than the recommended 20% on a conventional loan, your lender will compensate the extra risk by making you pay for private mortgage insurance. This will increase your monthly mortgage payment just as a higher interest rate would. If you can, save up for a larger down payment. Even if it isn’t 20%, it will improve your interest rate and lower your cost of private mortgage insurance.
Loan Term & Type
Interest rates will compile over time, meaning that the longer you have to pay it, the more you will end up paying over time. If you opt for a 15-year fixed-rate mortgage over a 30-year fixed-rate mortgage, your interest rate will be significantly lower, however, your monthly mortgage payment will be more. Even with higher monthly costs, you will end up spending much less if your interest rate is lower over the course of the loan.
Discount points allow you to decrease your interest rates by paying an upfront fee when closing on your mortgage. Each point is equal to 1% of the loan amount. This tradeoff will lower the risk taken on by the lender and in turn, save you money over the length of your mortgage. You will generally end up saving more on interest than the initial cost of the discount points. If you can afford it when closing, discount points are a great way to secure better mortgage rates in York PA.
Adjustable Rate Mortgage
Instead of taking out a fixed-rate mortgage loan, you can potentially secure a lower interest rate with an adjustable-rate mortgage. This type of mortgage loan is unique due to its variable interest rate, which changes over a fixed period of time. The initial interest rate is typically below the current market rate. Once this predetermined period ends, the interest rate adjusts at a pre-arranged frequency. The shorter duration that the adjustment period is, will typically cause the loan to have lower interest rates. Once the first term is over, the loan resets to the current market values. This type of mortgage is only recommended for those with specific circumstances and due to its complexity, it is highly recommended that you have a mortgage broker to help you successfully navigate it.
Hiring A Mortgage Broker
While there is a variety of steps that you can take on your own to lower your mortgage rates in York PA, one of the best things that you can do to benefit your mortgage terms is to hire a professional mortgage broker. They will effectively guide you through the process, offering transparent advice and negotiating with your lender to secure better rates and terms. Their expertise will help you find routes toward a more beneficial mortgage and expose options that you might have otherwise overlooked.
Professional Mortgage Brokers in York PA
If you want to secure the best possible mortgage rates in York PA, Federal Hill Mortgage is here to help. Our team of experienced mortgage brokers will guide you every step of the way and apply our extensive knowledge to your mortgage to get the best terms and lowest interest rates possible. Give your mortgage the benefit of having Federal Hill Mortgage in your corner. Call or visit our website today to get started.