(404) 988-2233
lisa.watt@compass.com
With the economy constantly changing, interest rates can fluctuate significantly, impacting everything from credit cards to mortgage loans. Locking in a low interest rate can save you hundreds of dollars over your loan if you're considering refinancing or getting a mortgage. Here's how to lock in the best deal before it goes up. 1. Improve Your Credit Score Having a better credit score makes getting approved for a loan easier and lowers your interest rate. Reduce your debt-to-credit ratio, pay your bills on time, and routinely review your credit report to ensure no errors. 2. Reduce Debt Lowering your debt-to-income ratio is crucial because it shows lenders that you aren't independent of credit. Reduce high-interest debts—like credit card balances—to strengthen your credit and get better terms. 3. Consider Short-Term Loans If you're looking for a mortgage, consider shorter loan terms. Loans with 15 or 20-year terms usually have lower interest rates compared to 30-year terms. They also offer the advantage of paying off your home sooner, though they come with higher monthly payments. 4. Lock in a Rate Consider locking it in with a rate lock agreement when you find a favorable rate. This agreement guarantees the interest rate for a set period, typically between 30 and 60 days. 5. Time Your Application Apply for loans when your financial health is strongest. If you've just paid off significant Debt or received a salary increase, your improved financial situation may help you qualify for better rates. 6. Choose Fixed Rates Over Adjustable Rates While adjustable-rate mortgages (ARMs) might offer lower rates initially, fixed-rate mortgages protect you from future rate increases. If rates are low and expected to rise, securing a fixed rate can shield you from higher costs. 7. Act Quickly but Wisely Interest rates can change rapidly, so you must act quickly once you decide to take out a loan. However, read all the terms and understand the agreement thoroughly before signing. Rushing into a decision requires understanding the details to be more efficient. Securing a low interest rate in a rising market requires diligence, a good credit history, and, sometimes, timing. By taking steps to enhance your creditworthiness, reduce Debt, and understand market trends, you can position yourself to lock in a rate that will benefit your financial future. Remember, the effort you put into securing a reasonable rate now can pay significant dividends over the life of your loan. Whether you're buying a new home or refinancing, taking control of the interest rate you pay is a smart financial move.
