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Finance 101

Getting the Best Deal while Mortgage Rates Rise

Posted on March 13, 2017 by Jake Ward

It’s no surprise that the Federal Reserve Board has been gradually raising interest rates. This has an effect on mortgage rates as well. So, if you’re thinking of buying a home, sooner is better.

Here are a few tips on making sure you get the best mortgage available:

  1. Have a strong credit score. Lenders want to know that you are able to effectively manage your finances. Your credit score has a direct effect on your mortgage rate. If your score isn’t very high, spend some time improving it before starting the home buying process.  A good credit score can save you tens of thousands of dollars in interest over a 30-year loan.

    If you need help improving your credit score, R.I.A. FCU members have access to free financial counseling from GreenPath

  2. Check your options. When you compare 15-year and 30-year loans, you’ll typically be offered a lower rate for the shorter term. That can help you pay off your home faster and pay far less in interest. BUT, with a shorter term, your monthly payment may be significantly higher, squeezing your budget.

    A great workaround is to get a 30-year loan, but be sure to get one that lets you make extra payments on principal without any penalties. That way, you can send in a larger payment each month (even one that approximates a 15-year loan). You’ll pay off your loan faster, and if life throws you a curve ball, you can always revert to paying just the lower minimum amount.

  3. The lowest rate may not cost you the least. Shop around for the lowest mortgage rate, but be sure to ask questions about fees and other charges. Some mortgage brokers employ sneaky techniques to hide some of these to make their services more attractive. R.I.A. FCU offers tremendous mortgage options at highly competitive rates and you can rest assured that we will disclose all fees and work hard to keep them as low as possible.

  4. Lock it in. In a rising interest rate environment, you will want to pay constant attention to the news and economic reports that may signal an interest rate increase. Work with your mortgage loan officer to lock in your rate as soon as you are comfortable, certainly no later than when you’ve made an offer on the home of your dreams.

Questions? Feel free to call the credit union at any time with your mortgage loan questions. Reach us at 1-800-742-2848.