There are many things you can do to lock-in a good interest rate on a fixed mortgage loan. You will need to prove to the mortgage lender that you are financially stable and responsible ― and the better you can do this, the more favorable your loan terms will be.
Credit Score
Lenders will use your credit score to determine your approval for a fixed mortgage. Your credit profile paints a picture of how risky an investment you are. It also influences the amount of interest you’ll be required to pay on a loan. If you have a solid credit score (above 700), the lender may be willing to offer you a lower interest rate.
Down Payment
If you can come up with a healthy down payment (approximately 20%), you are more likely to be approved for a fixed mortgage. The more money you put into the home in the beginning, the more equity you are starting with, and the less risk you bring to the table. Making a large down payment may also help you negotiate a lower interest rate.
Shop Around
Once you are prepared to apply for a fixed mortgage, you must decide where to obtain your loan. Don’t be afraid to meet with several different lenders, ask plenty of questions (and write down the answers), and compare offers. Remember that a 15-year or 30-year fixed-rate mortgage is a long-term commitment, and you will want to shop around for the best interest rate.
If you are dissatisfied with a quoted rate, you should ask what it would take to secure a better interest rate. With a little extra effort on your part, you may be able to save a substantial sum of money in the long run.
You may elect to use a mortgage broker to get the best deal on your fixed-rate loan. Brokers are familiar with various home loan resources and should be able to connect you with a reputable lender and a good interest rate. Many mortgage brokers have information that’s available online and will provide you with their recommendations for the best fixed-rate mortgage.
Keep in mind that if you can afford the payments on a 15-year fixed mortgage, your interest rate will be lower than on a 30-year fixed mortgage for the same loan amount. If you meet the general eligibility requirements for a fixed mortgage, the mortgage rates should be fairly similar from lender to lender ― any differences are likely due to their “profit margins.”
Also make sure that you can properly document your income and debts, as required by the fixed mortgage application. Any mistakes or inadequacies can adversely affect the interest rate you are offered.