Lowest Mortgage Interest Rate Considerations: Number of Years

If you are in the market to purchase a home, interest rates are at an all time low yet you still want to make sure you get the lowest mortgage interest rate possible. Here are a ____ great ways to get the lowest rate:

Mortgage Length

Consider taking out a 15 year mortgage loan instead of a 30 year loan. Typically you will pay about a half percent less on your rate for a 15 year loan that you will for a 30 year loan.

  • Your monthly payment will be higher, but having your home paid for in just fifteen years can add up to not tens of thousands saved, but hundreds of thousands of dollars.

Points

Talk to your lender to find out if it makes sense to pay points up front to buy down your interest rate. Think of paying points in terms of making an investment; if you have the available cash and you are confident you will be in your new home for at least 5 years paying points could be a good long term investment.

Put Your Best Foot Forward

As a borrower, you can make yourself more attractive to lenders (and get the best rates) when you:

  • can show steady employment for at least 2 years
  • have the money for a down payment plus reserves already in the bank
  • have a great credit score (720 and above will help garner the best interest rates)

Already In Your Loan?

If you are already paying off a mortgage loan, considering refinancing or just can't swing a 15 year loan you can still use time to your advantage.

  • Most mortgage loans do not have a penalty if you pay the loan early, and many lenders are happy to let you pay extra with each payment and let you designate the overage towards your principal.
  • You pay interest on the principal that you owe, so regardless of your interest rate you can save thousands and thousands of dollars over the life of the loan by paying extra on your principal as often as you can afford it.
  • Every year you can shave off your mortgage with early principal payments will be money in your pocket some day!

Get Legal Help

Most people don't realize how important it is to involve a real estate attorney early in your home search. An attorney can prevent you from entering into an onerous contract, can uncover a title nightmare before you buy a house, and can help with contractual issues. Find a great real estate attorney and add him or her to the small team of professionals.

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Talk to a Real Estate attorney.

How It Works

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  2. Provide your contact information
  3. Choose attorneys to contact you