When it comes to purchasing a new home, it can be a very daunting task. Many elements go into the mortgage process with lots of terms that may not make perfect sense. That is why it is best to hire a mortgage company. A mortgage company will explain everything up front, as well as, providing beneficial information about the costs and interest rates. The mortgage company will be able to help homeowners get the lowest possible interest rate. Here’s how:

1.Establish loan option:

When meeting with a mortgage company the first step is to discuss loan options based on your credit scores and financial situation. If you need a program with a zero downpayment or if your credit score is around 700, you will qualify for a slightly higher mortgage rate. Your credit score, DTI (debt to income), and downpayment will help influence what loan options are right for you.

2. Increase your credit score:

Like mentioned above the interest rate is based on certain factors, one being your credit score. If you want to get the lowest possible rate, you will need to increase your credit score. Typically a credit score over 740 will put borrowers in the best position to get the lowest rates.

3.Make a larger down payment:

A down payment insurers the lender that you have the funds to provide for the property. Most lenders want about 20% down. If you can provide that amount, you will be approved for lower rates.

4. Lower DTI:

Your DTI (debt-to-income) ratio can help determine your interest rate. The DTI is determined by the number of expenses you have monthly and the percentage it takes out of your monthly earnings. Most lenders look for a DTI that is 36% or less. Having a lower DTI shows lenders that you have enough funds to cover your mortgage payment, which will increase your chances at a better rate.

5. Compare:

This is where a mortgage company comes in hand. The mortgage company will "shop around" for you and provide you with a list of lenders that offer the lowest possible rate. From there, you will be able to decide on which company, by the way they present themselves to you or other factors. Choose a lender that listens to your questions and gives you respectable answers. This will be the negotiation period between lenders to find the lowest rate.

Good luck on your home purchase!