If you plan to buy a home in Florida and do not have the cash to make the entire purchase, you will have to borrow money from a bank or another lending institution. With this comes interest rates that you pay over the course of your loan. Because the smallest increase in interest rates can mean you pay thousands of dollars more than those with a lower rate, you should do your research to determine how and when to get the best interest rate for your mortgage.
According to Bankrate, one of the best ways to get a better interest rate is to improve your FICO score. One of the first things a lender checks is your credit score, which provides a history of how likely you are to pay back the money that you have borrowed. Those with lower credit scores will end up with higher interest rates because it is a bigger risk for the lender to provide you with the loan.
You can improve your credit score by eliminating credit card debt and paying your bills on time. If you must carry a balance on a credit card, keep it under 20-30% of the available credit limit. Consumers should also check their credit scores regularly to make sure there are no mistakes or identity theft problems.
Another way to lower your interest rate is to provide a bigger down payment. If you have the liquid cash to put down a 20% payment, it can significantly lower your rate. If you cannot come up with the 20%, you will probably have to carry mortgage insurance which can increase your monthly payments. The more you put down, the more obvious it is to the lender that you are invested in paying for your home.
Once you have been quoted a rate from a lender, make sure to lock it in. As you work through the buying and closing process, the interest rate may fluctuate, and it may cost a fee to lock it in, but it can make a serious difference in your payments.
This information is intended for educational purposes and should not be interpreted as legal advice.