These 4 key tips can give you better control over the process, so you can access the lowest rates possible.
It is exciting to buy a home, with many people considering it a crucial step in fulfilling the “American dream.” Last year, a consumer financial report revealed that almost 100 million people — 2 in 5 US families (99.3 million) — were planning to buy a home by 2025.
It is important to understand your limits in terms of house price so that you are searching within the right range. Through mortgage prequalification, the first step toward mortgage preapproval, you can determine what you can afford. Once you understand that, you can find the best mortgage rate to accompany the purchase.
Fixed-rate is preferred by most families since it allows you to lock in the same interest rate for the life of the loan.
4 tips for the best mortgage rates in Minneapolis
Here is advice to land the best mortgage rate:
Tip #1. Evaluate your financial picture.
You will be able to get a better mortgage rate if your finances are stronger. Putting down a larger down payment reduces your rate, so consider ways to save (through cutting expenses or additional income). Get your debt-to-income ratio (DTI ratio) as low as possible and bolster your credit score by making on-time payments and paying down your balances. The myFICO Loan Savings Calculator is an excellent way to get a sense how improving your credit score will improve your mortgage rate.
Tip #2. Consider an adjustable-rate mortgage (ARM) vs. a fixed-rate mortgage (FRM).
The latter type of mortgage, fixed-rate, is preferred by most families since it allows you to lock in the same interest rate for the life of the loan. While property taxes and insurance may change periodically, you will have a consistent payment toward principal and interest. With the former mortgage type, adjustable-rate, the rate may shift after an introductory stint of 1-7 years, during which the rate stays the same and is typically lower than fixed-rate offerings.
Interest rates will typically be significantly lower for 15-year fixed-rate mortgages than 30-year FRMs.
Tip #3. Look at shorter-term loans.
Interest rates will typically be significantly lower for 15-year fixed-rate mortgages than 30-year FRMs. For example, the weekly averages as of December 9, 2021, within the Freddie Mac Primary Mortgage Market Survey (PMMS) were 2.38% for 15-year and 3.1% for 30-year.
"Ted is fast, honest, and I would highly recommend him to anyone." — Joe Dickson, 5-star Google review
Tip #4. Find the right lender.
Finally, you will get the best rate for your situation with the right professional team, who can guide you toward the best lender offerings. Our clients in Minneapolis and the Twin Cities Metro are enthusiastic about our ability to get them incredible rates, with all our 56 Google reviews currently 5 stars! “Ted was a great loan officer for a couple of first-time home buyers!” wrote one client two weeks ago. “He… generally helped make a huge decision much easier than expected.” Explore our process.