Understanding How to Get the Best Interest Rate on Your Home Loan

Last updated 3 months ago

A lender will prioritize your credit history and current financial standing when determining your interest rate. Factors like a steady, full-time job will help to swing their decision making in your favor. Following these steps can also help you achieve the lowest possible rate.

Improve Your Credit Report: The easiest way to avoid credit history surprises at the bank is to review your score at home. All citizens can access a free annual credit check through reporting agencies like TransUnion and Equifax. Studies show at least 1 in 4 credit reports includes errors that unfairly lower your score. Correcting these issues can add an instant boost to your score. Also use your credit report to determine which payments you’ve fallen behind on. Get up to date with these charges before approaching the bank.
Demonstrate Low-Risk Behavior: The next step in securing a low interest rate is demonstrating a consistent credit history. Paying bills on time is only one component of boosting your credit score. Factors like outstanding debt and diversity of credit also play a big role in your final interest rate. Begin by establishing a budget to pay all of your bills on time. Borrowers might even consider bringing this budget into the bank to further support their responsible spending habits. Offering to pay a down payment larger than the minimum is another great method for minimizing your interest rate. The more of the cost you pay upfront, the less your bank will view your mortgage as a risk.
Attempt Renegotiation: Your interest rate isn’t set in stone. Don’t be afraid to apply for a new rate if your financial situation changes. Lenders may charge a series of penalty fees for renegotiation. Track out your total savings over the life of your loan and compare these to the penalties a lender threatens to charge. If your overall savings are still positive, start talks with your bank to renegotiate.

Let the Dominion Mortgage Team handle your refinancing with professional courtesy and speed. Dial (888) 570-4197 to find out how we can lower your monthly payments.