Since the global pandemic, the mortgage market has witnessed a landslide regarding the rates. This can be the perfect time for borrowers to purchase a house; however, many of them are facing the worst situations in life. The federal government could not provide a relief package for the coronavirus in August. Now, this has led to low rates for the most popular home loan products. Believe it or not – the mortgage rate fell 0.8 point. Hence, people could bag a 30-year fixed mortgage rate at 2.88%. Most of the mortgage rates have gone south and downward pressure is likely to loom over the market. So, you can guess how there are prospective chances to get the best loan rates now.
The Fed has also hinted at low rates in the upcoming years. It goes without saying how the borrowers can finally benefit from the lowest mortgage rates in Houston. Some lenders still keep their rates high so that they can perfectly tackle refinances. Lenders are now encountering a series of refinances. However, professionals cannot pinpoint a time when the rates are finally going to stop falling down. In case you are looking for the best ways to save on mortgage rates, take a look below.
Work on your DTI ratio
When you have a high debt-to-income ratio, it triggers the mortgage rate. The ratio is an indicator of the percentage of the entire monthly income. Now, this adds to your debt repayment. When the ratio is, you can unlock a better mortgage rate. Buyers who come up with a large debt always have a higher risk factor. Put your focus on improving your ratio and start paying down personal or auto loans. Manage your outstanding credit balances and make sure it does not go over 30% of the entire credit line.
Choose a shorter loan term
Pick a short home loan term for securing a comparatively low mortgage rate. If you extend the term to 30 years, you can also reduce the payments. Now, there is a ‘but’ with this proposition. Shop around and check different 20-year and 15-year mortgages. The monthly payments go up; however, the interest rates remain low. It is smart to build equity and pay off the loan quickly.
Go with a large down payment
Many of the loan products ask for a small or zero down payment. If you are buying a house for the first time or struggling with bad credit, subprime loans are what you can see. When you are already high on the risk factor, try to come off as a potential borrower. Once you go for at least 20% of the loan value, the lender can consider lowering the rate. This can be a great move for lowering the monthly payments as you need not deal with private mortgage insurance, either.
In the end, shop around and weigh your options. Remember, the mortgage rates change across the loan types. The FHA home loan programs have better rates than those of the traditional loans. So, choose carefully!