(Source: anica.realtytimes.com)

When you are buying a home, the cost includes not only the purchase price, but also the amount of money you will pay in interest over the life of your mortgage. Getting a good interest rate can save you thousands of dollars and can make your home ownership experience easier and more rewarding. You can negotiate the best interest rate for your home loan by following a few tips

1. BUMP UP YOUR CREDIT SCORE

Financial institutions favor loan applicants 760 or above for their best interest rates. If you have any problems on your credit record, it will serve to pull down your rating and prevent you from getting a good interest rate. Start monitoring your credit record at least a year before you are ready to apply for a home loan. Pay down your debt, and take care of any past-due accounts that are listed on your record. Hold off on any large purchases that will increase your debt-to-income ratio.

2. INCREASE YOUR INCOME

Most financial institutions want an applicant to be employed at their jobs for at least two years. However, if you have left a job to take a better-paying position, the change will be seen as a plus for your ability to make mortgage payments. If possible, make your job changes a few years in advance of your loan application to make the best financial impression.

3. SAVE MORE FOR YOUR DOWN PAYMENT

You can improve your odds for getting a low interest rate by saving as much as possible for your down payment. Down payment amounts less than 20 percent are generally seen as higher risk because the homeowner has less equity in the home from beginning. A down payment of 20 percent or more indicates you have skin in the game, and you will do all you can to make your payments and protect your investment. For more information on how down payments affects interest rates, you can contact Premium Mortgage Corp. or a similar institution for professional advice.

4. SOCK AWAY A CASH RESERVE

Once you have put aside a sizable down payment, you should also save additional funds in a savings account. When you are able to show a significant amount of money saved for emergencies, the financial institution will feel assured that you will be able to make your mortgage payments when difficult times arise. This additional money shows you are a responsible individual with foresight, which puts you in the best possible category for loan risk.

These simple tips can help you to present the best case for a lower interest rate. This will save you a significant amount of money over the long term. You will find that financial institutions are ready and eager to serve your needs when you can present the conditions that make them feel their loan money will be secure.