Mortgage rates recently hit 7.23%, which represents the highest they have been since 2001. When shopping for a home during a time with high mortgage rates, you need to work extra hard to find affordable rates. Below are some recommendations that can help.
- Choose the right interest rate format. A good thing to ask yourself before you choose a mortgage is, “Do I want a fixed rate or an adjustable rate?
- With an adjustable rate, you start out with a low introductory mortgage rate. After several years with that rate fixed, the rate then is determined by market rates going forward.
- With a fixed rate, you lock in a rate that is permanent for the lifetime of the loan.
The advantage of choosing an adjustable rate mortgage in this scenario is pretty clear. A fixed rate mortgage can work out too though; just plan on refinancing it later.
- Learn about the different mortgage types. When you are choosing a mortgage, make sure you look into all of your options—especially those that may help you to qualify for affordable interest rates. In particular, government-backed loan programs like FHA, VA and USDA are great for keeping rates low even without perfect credit. During your consultation, our loan experts can help you explore these different loan programs and figure out what you qualify for.
- Enhance your borrower profile. Now is the time to do what you can to make your borrower profile as competitive as possible in order to qualify for the most affordable rates. That means increasing your credit score, and doing the same with your income if you have that option. Try paying off debts to improve your debt-to-income (DTI) ratio if you have the means. And make sure you have properly documented all of your assets. These steps will all be a big help no matter what type of home loan you are applying for.
- Increase your down payment size. Are you familiar with the concept of loan-to-value (LTV)? The LTV is the percentage of the home’s value that your lender is loaning you to purchase the property. The rest of the value is what you are paying upfront with your down payment. By raising your down payment amount, you reduce your LTV. When the LTV is lower, so is the risk for the lender. As a result, they may be willing to offer you lower mortgage rates.
- Buy your dream home. This might sound like an unexpected bit of advice, but if rates are high, now is the time to really focus your search for your dream home. You may be competing against fewer homebuyers, who could be staying out of the market right now because of the rates. That also means that more properties could be for sale. So, you can shop a wider home selection, and your chances of making a successful offer may have increased.
- Work with a mortgage company that goes above and beyond. Another way to handle shopping for a home when mortgage rates are high is to choose an experienced mortgage company that will spare no efforts to bring you affordable rates.
Contact Your Local Mortgage Broker Today!
At Mortgage Consultants Group, we have over 29 years of experience helping homebuyers move affordably into new homes regardless of economic factors. Whether you are shopping for a home in Rancho Cordova or anywhere in California, we can connect you with a flexible mortgage featuring affordable rates. To schedule your consultation now, please give us a call today at (916) 669-1682.
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