Four smart ways to get a low interest rate

With interest rates at an all-time low, now is a great time to buy. But did you know that even if your credit score isn’t the best, there are still ways you can get a low rate?

Interest Rates Increasing

 (Photo credit: 401k Limits)

If you’re in the market to buy a new home, it’s a great time to do so since interest rates are at an all-time low.

You probably already know that having good credit and a steady job definitely help, but having little debt and researching lenders will also make a big impact on your score.

Here’s what I’ve found that can help you get a low rate. If you have anymore ideas, send me an email and I’ll update this post.

Tip #1: Negotiate Closing Costs and Interest Rate

When you take out a loan, you’ll have to pay fees known as closing costs.

Closing costs can run anywhere from 3 to 6 percent of the loan, and typically include fees such as an application fee, a loan origination fee, and an appraisal fee.

You can save on those costs by negotiating with the seller to have them pay for some of these costs. This is what’s called a Seller Concession.

Seller concessions can lower the interest rate on your loan by “buying down” your interest rate. Buying Down varies from lender to lender.

Tip #2: Understand Your Debt-to-Income Ratio

Lenders want to make sure you’ll be able to make your monthly payments comfortably so you don’t default on your loan. So naturally, they’ll look closely at your debt-to-income ratio – which compares your debt with your income. This typically includes long-term debts like car or student loan payments, alimony, or child support, according to the Federal Housing Authority (FHA).

Lenders will reward borrowers who have a low ratio with a lower interest rate.

Your monthly mortgage payment and any other long-term debt you may have car loans, credit cards, …shouldn’t total more than 41 percent of your gross income. So if your potential new mortgage would put you over that threshold, you could be looking at paying higher interest rates to compensate.

Make sure to pay down any revolving debt (like credit cards) to a low balance. This will improve your debt-to-income ratio and your credit score.

Tip #3: Get a 15-Year Mortgage

A short term loan will get you a lower interest rate than the typical 30 year mortgage. Just make sure you can handle the monthly payments.

Tip #4: Don’t Put all of Your Eggs in One Basket with One Lender

The mortgage industry is a competitive market, I highly recommend comparing mortgage terms from several lenders to make sure you get the best deal. Mortgage companies have different programs and different rates & costs.

Bring updated copies of your credit report and make sure you keep very good notes about what you’ve learned from each lender.

You’ll also need to lock in the deal and ask about a rate lock-in for the interest rate offered to you. A rate lock-in is a written agreement between you and your lender that your rate will remain the same for a specific amount of time, according to Freddie Mac.

As the real estate market continues to progress so will interest rates.

Have anymore information you think I should add?

Email me at

Ann Mc Guire


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