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You can save a lot of money over the life of your loan if you choose a 15 year instead of a 30-year repayment term. By shortening your loan term, you can also get a lower interest rate upfront. As we discussed previously, it’s far less risky to predict repayment 15 years out than it is to predict 30 years out.

Although your monthly payment will be higher on a 15-year loan, you could potentially save tens of thousands in interest over the life of the loan. Not only will you lower your interest rate, but you’ll pay more toward your mortgage balance faster than you would on a traditional 30-year loan.

Although it’s not advised that you attempt to “time the market” – waiting for a perfect moment – it does make sense to act when interest rates are lower, or at least before they get any higher (best mortgage refinance rates).

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Fortunately, there are ways to set yourself up to get the best possible mortgage rate, even in this high-rate environment. Your mortgage rate influences both your monthly payment and how much money you’ll pay overall during the term of your loan, so even minor differences add up. For instance, if you chose a 6.

75 percent rate on a 30-year loan, you could save $7,500 for every $100,000 borrowed . Your loan’s interest rate depends on many factors, including your down payment, credit score, the appraised value of the home you’re buying and the time period, or term, of your loan. how to get the best mortgage rate. We’ll break down how to find the best mortgage rates for your home purchase.

In general, the more confident the lender is in your ability to repay on time, the lower the interest rate they’ll offer. To improve your score, pay your bills on time and pay down or eliminate those credit card balances. If you must carry a balance, make sure it’s no more than 20 percent to 30 percent of your available credit limit. how to get the best mortgage rates.

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It can be more difficult to qualify if you’re self-employed or your pay is coming from multiple part-time jobs, but not impossible. If you’re self-employed, you might need to furnish business records, such as P&L statements, in addition to tax returns, to round out your application. What if you’re a graduate just starting your career, or back in the workforce after time away? Lenders can usually verify your employment if you have a formal job offer in hand, so long as the offer includes what you’ll be paid.

Specifically, it compares your total monthly debt payments against your gross monthly income. How to figure out your DTI ratio? Bankrate has a calculator for that. In general, the lower your DTI ratio, the more appealing you are to lenders. A low DTI means you can likely afford a new loan payment without stretching your budget.

You’ll pay more each month, but pay off your home sooner — and you’ll pay less in interest, since interest rates on 15-year mortgages fall below other mortgage options’. You can also go for a 15-year term if you’re refinancing your current mortgage. Alternatively, while rates are high, you might want to consider an adjustable-rate mortgage (ARM).

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After this period expires, you’ll switch to an adjustable rate (which means your rate can go up and down) for the remainder of the term. Whenever rates fall, you could refinance an ARM loan into a fixed-rate mortgage. Finally, you can see if you qualify for government-sponsored loans, such as: Insured by the Federal Housing Administration, FHA loans are popular with first-time homebuyers since the minimum credit score and down payment requirements aren’t as high as they are with conventional loans.

Learn how to refinance your mortgage and if it’s a good option for you with our free course When searching for the best mortgage rate, even for a refinance, do the necessary research to make sure you’re getting the best fit for your situation. Don’t accept the first rate you’re quoted — it pays to shop around.

Now that you know how to get the best mortgage rate, it’s time to choose the best loan offer and rate and apply for the loan. Here is an overview of what you can expect during this process: Within three days of applying, you’ll get a loan estimate, which spells out the details of the mortgage.

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If you have any questions about what’s in your loan estimate, you can ask your lender for clarification at this time. Your lender’s underwriting department will review your application to determine whether to approve your mortgage. During this time, you might be asked to provide more documentation or answer questions, so be prepared and responsive.