How to Lower Your Mortgage Rates

If you have bad credit, you may think that you cannot buy a house. There are programs offering mortgage loans for poor credit. However, just because you may be able to qualify for a mortgage with a bad credit score, it might not be a good idea. Finding affordable mortgage loans New Jersey usually means having better credit. Therefore, we recommend repairing your credit score before getting a mortgage whenever that is possible.

Having good credit is not the only way to lower your mortgage rate. Other ways to lower your mortgage rate include:

Shopping Around

While most lenders will have competitive lending rates, when it comes to mortgages even a fraction of a percentage makes a difference. You can compare mortgage rates online. Make sure and look at local banks or credit unions as well as national banks.

Work History

The longer and more consistent your work history, the less of a risk you appear to lenders.

Consider a Shorter Mortgage Term

The shorter your mortgage term, the better your interest rate. Not only that, but the fewer years you pay interest, the lower the total amount you will pay for your loan.

Look at Adjustable Rate Mortgages (ARMs)

People are frightened about ARMS because of balloon payments or tremendous mortgage increases that helped usher in the last major housing crisis. If you can pay off your home loan during the ARM’s fixed-interest period, they can be a great way to save money on interest.

Ask for a Better Rate

While you can compare rates online, there is something important about the personal touch. You can always ask your lender for a better rate. The better your credit, the more likely they are to match competitors’ rates or lower your rate.

Increase Your Down Payment

The more of the house you pay for with your down payment, the better your mortgage rate will likely be. That can mean saving more money or buying a starter house to build equity and improve your credit.

Purchase Points

For many borrowers, points are one of the more confusing things about home loans. Paying points, which are equal to 1% of the loan’s value, can lower your loan by around 0.125% per point.

Arrange for Electronic Banking

Many lenders offer discounts on your interest rate if you set up your mortgage for automatic payments.


Right now, mortgage rates are extremely low. If you originally got your mortgage when rates were higher, or you had a bad credit score, look into refinancing. Even though refinancing costs money upfront, it can lead to tens of thousands of dollars in savings over the life of a mortgage.

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