Right now is one of the best times to buy a North County San Diego home. Why? One big reason is that mortgage rates have hit historic lows. If you’re in the market for a new home, then you have the opportunity to save big on your home loan. But how do you make sure you’re getting the best rate for your situation? Here’s what you need to know.
Save for a down payment
While you can choose to finance your new home with a mortgage that only requires a small down payment, such as an FHA loan, you will get a better interest rate if you put down more. The more you can pay for your down payment, the smaller your rate will be. When you make a larger down payment, your lender assumes less risk because you’re borrowing a smaller amount of money. When your lender has less risk, they can afford to be more generous with the rate. You’ll score the best deal if you can put down at least 20 percent of your purchase price.
Work on your credit score
Your credit score is a major factor when it comes to determining your interest rate on a home loan. The better your credit score, the more favorable your rate will be. In fact, having an excellent credit score can save you literally thousands of dollars over the life of your mortgage. Having a score above 760 will get you the best rate. If your credit score isn’t as high as you’d like it to be, there are things you can do to improve it before you apply for a loan. Pay down your other debt and avoid taking out new lines of credit. You should also get a copy of your credit report and check it for mistakes. Have any errors removed before you begin your mortgage application process.
Shop around for the right loan
Did you know you can shop around for a home loan the way you can shop around for a house? Different lenders will offer different deals and terms. You should also consider other factors such as the length of the loan. The interest rate on a 15-year loan will be lower than that for a 30-year loan. You can also choose between a variable rate and a fixed-rate mortgage. Variable-rate mortgages will most often have lower rates in the beginning, but the rate could get much higher over the life of the loan. It’s also possible that you can score a great rate for FHA, VA, or USDA loans, but you must also meet their income requirements.
Buy an affordable home
The price of your home can affect the interest rate on your mortgage as well. Conforming loans – those that are $424,000 or less – will have the best rates. Super conforming loans – those that are $636,150 or less – will have slightly higher rates. And you’ll pay the most in interest on jumbo loans that exceed those amounts.
Work with a pro
When it’s time to buy a North County San Diego home, it’s important to work with a professional. The Cristine Clark & Jamie Gilman Team has been helping North County homebuyers get the best deals for many years. Contact us today at 760-758-1211 or [email protected]. Let our team help make your dream of homeownership a reality!