3 Tips For Getting the Best Financing Rates For a Home
Are you looking to get the best financing rates for a home in Oshawa or other parts of Southern Ontario? It goes without saying that purchasing a new home is a significant financial investment.
While it’s certainly possible to purchase a home with cash, most home buyers take out loans. So, how can you make sure you get a loan with good rates?
At Your Home Sold Guaranteed Realty of Ontario, we believe in empowering home buyers to make financial decisions confidently. That’s why we’ve prepared this short guide on how to navigate financing rates.
How to Get the Best Financing Rates For a Home
Buying a home in Oshawa or anywhere in Southern Ontario, starts with getting pre-approved for a mortgage. In fact, many real estate agents will only work with potential home buyers who are already pre-approved.
Mortgage pre-approval is essentially a certificate guaranteeing a loan for a specific amount. Your loan locks you into a specific interest rate, which can help if rates rise. Though if they go down, you’ll usually end up with lower rates.
Mortgage pre-approval has several key benefits, including:
- More security in the house-hunting process
- Insurance against rising interest rates
- Standing out from other buyers
- Access to showings exclusively for pre-qualified buyers
So, how can you make sure you walk away with a reasonable interest rate? Below, we’ll touch on three ways to get good financing rates. But for more information, click on the link and check out our full guide on “3 Tips to Obtain the Best Financing When Buying a Home.”
1. Improve Your Credit Score
Lenders will be more likely to give you better financing rates if your overall financial situation is healthy.
Evaluate your credit score and consider whether it needs to be improved. If you need to, find ways that you can pay down your balance and make your payments regularly.
In general, a credit score of 760 or above will help you qualify for loans with the lowest insurance rates. However, be sure to check with your lender to see what options you have with your score.
2. Make a Bigger Down Payment
The next option for getting the best financing rates for a home in Southern Ontario, is to save up and make a bigger down payment.
A smaller down payment means you have to borrow more money. As a result, lenders will likely consider you more high-risk since you’re taking out a larger loan.
If your down payment is too low, your lender may include a fee for private mortgage insurance to help protect them.
Avoid extra fees entirely and get better interest rates by saving up for a larger down payment.
3. Increase Income and Decrease Debt
Your current income level and amount of debt also factor into what interest rates you get. Aside from credit score, your income-to-debt ratio also gives lenders an accurate depiction of your financial situation.
Naturally, lenders feel more comfortable giving loans to borrowers with a stable income that’s high enough to pay off their loan amount each month. In addition, having a high level of debt will make you seem riskier compared to a prospective borrower without any debt.
Fixing your income-to-debt ratio can help lenders gain more confidence in your ability to repay the loan. As a result, you’ll be more likely to get a loan with lower interest rates that fits your needs.
Our Real Estate Team Can Help You Buy a Home in Southern Ontario
At Your Home Sold Guaranteed Realty of Ontario, we’ve been helping home buyers find homes in Oshawa, Northumberland, Southern Ontario, and the Durham Region for years.
Our ultimate goal is to help everyone find their dream home for the lowest price possible.
To that end, we want to help you save money and get the best financing rates for a home. Our real estate team can point you to our recommended lenders so you can get started on the pre-approval process.
To learn more, give us a call at (905) 440-0505, or fill out the form below for more information.