How to Get the Best Mortgage Interest Rate as Rates Rise

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Improve your credit score

When applying for a new line of credit with a low credit score, you will likely receive a higher interest rate, which will make it more expensive for you to borrow money. The same idea also rings true when it comes to applying for mortgages.

Remember that your credit score can give lenders clues as to how likely you are to repay borrowed money on time and in full – which is why lenders consider people with lower credit scores to be more borrowers. risky and offer interest rates that are towards the higher end of the lender’s range.

Conversely, when you apply for a home loan with a higher credit rating, you will be considered a less risky borrower who is likely to repay the loan amount on time and in full. Lenders will then feel more comfortable offering a lower interest rate and it will be cheaper for you to borrow money.

Paying your bills on time is the single most important thing you can do to boost your credit score. You should also try to keep your debt balance low and check your credit report regularly so you can challenge any potential inaccuracies that could lower your score – credit monitoring services like Experian and IdentityForce® can help.

Find the best rate in your area

Mortgage interest rates can fluctuate depending on the market and national rates can provide a good rough estimate of where your rate might be. Keep in mind that the rate you are likely to receive will depend more on factors such as your specific location, credit score and credit report. While you can check each lender’s website to get an idea of ​​the interest rates they charge, the best way to get an accurate idea of ​​what you’ll be paying is to provide the necessary information and check your rate.

That said, it’s important to submit your information and verify your rate with more than one lender so you have a better chance of getting the lowest rate possible. Don’t worry about your credit score getting hit multiple times – when you apply for a mortgage, you can submit your information for further investigation as often as needed within 45 days without your credit score suffering.

Although you won’t always get an extremely low rate between lenders, even a small distinction can make a big difference in the amount of interest you’ll pay each month.

Consider a shorter loan term

Terms of 15 and 30 years are common for mortgages, meaning you would have 15 and 30 years respectively to pay back the money you borrowed to buy your home. A 30-year loan generally gives you a longer time horizon to make payments, as well as smaller monthly payments. Note that shorter loan terms usually carry slightly lower interest rates since you agree to repay the loan over a shorter period.

RocketMortgage offers home loans with terms as short as eight years and as long as 29 years — this lender also offers Federal Housing Administration, or FHA, loans with down payments as low as 3.5%. Other lenders, such as SoFi and PNC Bank, offer terms between 10 and 30 years. SoFi is also offering a number of loan benefits — a $500 rebate for SoFi members and up to $9,500 in cash back when you buy a home through the SoFi Real Estate Center — that could potentially offset at least part of the interest you would pay even if you decide to opt for a longer loan term.

Rocket Mortgage

  • Annual Percentage Rate (APR)

    Ask online for personalized rates

  • Types of loans

    Conventional Loans, FHA Loans, VA Loans, and Jumbo Loans

  • terms

    8 to 29 years old, including 15 years old and 30 years old

  • Credit needed

    Generally requires a credit score of 620, but will consider applicants with a credit score of 580 as long as other eligibility criteria are met

  • Minimum deposit

    3.5% if you go ahead with an FHA loan

Advantages

  • Can use the loan to purchase or refinance a single family home, second home or investment property, or condo
  • Can be pre-qualified in minutes
  • Rocket Mortgage app for easy access to your account

The inconvenients

  • Performs a thorough investigation to provide a personalized interest rate, which means your credit score may take a hit
  • Does not offer USDA loans, HELOCs, construction loans, or mobile home mortgages
  • Does not manage accounts for jumbo loans after closing

SoFi

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed and adjustable rate mortgages included

  • Types of loans

    Conventional loans, jumbo loans, HELOC

  • terms

  • Credit needed

  • Minimum deposit

Advantages

  • Quick pre-qualification
  • Provides access to mortgage officers for advice
  • $500 off for existing SoFi members
  • Interest rate deduction of 0.25% when you lock in a 30-year rate for a conventional loan
  • Offers up to $9,500 cash back if you buy a home through the SoFi Real Estate Center

The inconvenients

  • Does not offer FHA, VA, or USDA loans
  • Mortgages are not available in Hawaii, New Mexico or New York

Choosing your term is an extremely important decision as there are pros and cons to choosing a shorter term over a long term. If you end up opting for a shorter term, make sure that the larger monthly payments that would inevitably follow can fit within your budget.

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Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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