It takes more than comparison shopping to get a great deal on mortgage rates in Guilford. But lowering your mortgage rate by at least 2% or more could help you save more than a thousand dollars throughout the years. Here are a few ways you can get the best mortgage rate possible.
Fix Your Credit Score
One of the best ways to get competitive mortgage rates is by improving your credit score. Having a higher credit score shows banks that you’re more likely to be able to keep your loan current compared to others. You may improve your credit score by spending less than 30% of your credit limit and paying your bills on time.
Consider Your Debt-to-Income Ratio
Another factor that you may want to consider is your debt-to-income ratio. A person’s DTI comes in two different forms. One is the back-end ratio, which comprises all your monthly minimum loans payments, and the front-end ratio, which focuses on your housing expenses. Most banks want to see a person’s front-end ratio to be less than 28% and the back-end ratio less than 36%. A mortgage lender may allow you to go over the limit if you have proof that you have the capacity to take care of your loan.
Increase Your Savings
Keep in mind that you’ll be paying more than just the loan’s down payment. You also have to think about the private home loan insurance and other fees associated with the loan. So it’s essential to have at least three months’ worth of savings as a backup plan.
Getting the best mortgage rates requires a lot of effort from your end. Work with your mortgage provider to see if there are any other options available for you to lower down your loan.