Buying a house brings a momentous change in your life as you secure steady employment. It is going to be the largest investment that you will ever make. Now, finding the money for your dream abode seems grueling, in today’s economy. For this reason, you would want to commit to a loan that demands low monthly payments. With low-interest rates and other charges, you can save thousands of dollars in the upcoming years.
For finding the best mortgage rates Houston, start shopping around. Remember buying your first car? The terms and prices may be negotiable if you grab the best deal available. Hence, the first thing to do is to gather information from various lenders. According to the lenders, quotes vary. If the credit score is a bit of an issue, you can look at government-backed loans like FHA and VA. These mortgages have competitive loan rates, but there is a catch. FHA demands mortgage insurance when the down payment is lower than 20%, and VA demands funding fees. In other ways, there is pressure on monthly mortgage payments.
If you want to snatch the best mortgage rates in Houston, here are a few steps to follow.
Start the Process Early
When you want to invest in a house, you need to get finances in shape. You should think ahead and put a pause on house-hunting; after all, your financial condition is more important. An outstanding credit is the only to lower down the interest rates. Therefore, the borrower must carry at least 740 for the best mortgage rates. On the other hand, FHA loans have flexible guidelines but strict conditions. Also, you should save up for putting down a larger portion of the home purchase price. If you manage to put down 30%, the rate could drop by 0.5%.
Check down payments and PMI
Some lenders might ask you to put down 20% of the loan value as a down payment. Now, lenders provide mortgages less than 20%, as low as 5%. When a borrower cannot put down 20%, the lender asks him to purchase PMI. The mortgage insurance protects the lender if the borrower defaults on a mortgage. VA does not require down payment; therefore, the VA borrowers need not pay for private mortgage insurance. So, you should ask the lender about the down payment and the special programs related to it. Ask about the total cost of the mortgage insurance and how much you have to pay per month.
To Acquire the Best Rate
After obtaining information on what the lender can offer, you should negotiate the deal. When the interest rate is high, you will pay more per month. In this way, you will pay more for the house over time. If you pick a 30-year fixed-rate house loan for $200,000, your monthly payment might be around $1,025 per month. Also, it is the estimation for the prime rate at 4.6%. At a subprime rate of 6%, your monthly payment might be around $1,199.
There is much work involved in finding the best mortgage rates in Houston. A stellar credit is essential along with a sizable down payment. So, remember these tips before choosing a loan.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.