Tips to Getting a Lower Mortgage Rate
Let’s admit the obvious – rates are higher now than it was a few years back. And while this could be a challenge for any potential homeowner, there’s always a way around this obstacle.
As your friendly neighborhood home acquisition partner, here are some of our recommendations on how to secure a lower rate for your home.
Tip #1: Build a Better Credit Score
One truth in home buying that we must consider is that a higher credit score will result in better rates.
How impactful is one’s credit score? Let’s say a homebuyer wants to get a $300,000, 30-year fixed-rate plan. According to myFICO, a homebuyer with a credit score between 760 to 850 will pay roughly $300 less per month than someone with a credit score of 630-639.
We’ve made a detailed article with tips on how to maintain a good credit score. Check the article here to get started on that front.
Tip #2: Shop Around the Neighborhood
Another tactic homebuyers can employ is to check the current rates of various lenders or financial institutions. Typically, lenders offer different rates depending on several factors. There’s nothing wrong with asking for the best quotes and opting for the one that would fit your budget.
While IjaraCDC is not a lender, we work closely with investors to provide homebuyers with the best rates in the market. Plus, our structuring process is 100% Sharia-compliant, ensuring you live in a riba-free home.
Tip #3: Select the Right Mortgage Program
Along with the large number of lenders in the market, there are also numerous programs that you can take advantage of when buying a home. These include Freddie Mac and Fannie Mae’s conventional residential programs, VA programs, and USDA home acquisition programs. Make sure to inquire about these programs and see which would best fit your needs.
Additionally, state-run organizations can offer down payment assistance programs targeted toward home buyers. While this won’t result in a lower monthly payment, it can be a good jumpstart to the homebuying process.
Tip #4: Negotiate the Mortgage Rate
Learning how to properly negotiate with the seller can help lower the purchase price, leading to a better mortgage rate. If you do it right, you might even get a mortgage buydown, where the seller agrees to pay the lender for the first few years of your mortgage.
If negotiating isn’t your strong point, don’t worry. Having a smart realtor by your side can negotiate on your behalf for a better deal. For homebuyers without a realtor yet, feel free to check our Preferred Realtor list for someone in your area.
Tip #5: Increase the Down Payment Amount
Depending on the home acquisition option you choose, lenders may require a down payment ranging from 0% to 3.5%. While you can pay the minimum amount, nothing’s stopping you from making a larger down payment.
What does paying more do? Well, you’re giving lenders a better impression as a borrower and making you a low-risk account. Thus, resulting in lower monthly rates.
Better Rates, Worry-Free Home Living
There’s no shame in finding a better rate for your home. We hope that these tips can bridge your way through homebuying success.
Need help with searching for a rate that works for you? Talk to the experts at Ijara CDC today. We partner with well-vetted investors, plus it’s riba-free!
