According to Zillow, only 23 percent of buyers pay cash when buying a home. The rest use some form of loan service. So if you’re like the majority of homebuyers, you’ll need to find the best mortgage rates. And with lots of lenders to choose from, here are four tips to help you find the best rates.

1. Understand the Options You Have

First, it’s essential to understand that there are two types of mortgage rates: fixed and adjustable. Fixed-rate mortgages have an interest rate that stays the same for the life of the loan, while adjustable-rate mortgages have rates that can change over time. Adjustable-rate mortgages typically start with a lower interest rate than fixed-rate mortgages, but that rate can increase or decrease depending on market conditions.

2. Check and Work on Your Credit Score

If your credit score is 760 and below, now is the time to work on improving it. The higher your credit score, the lower your interest rate will be. To improve your score, pay off your debts, maintain good payment history, and use less than 30 percent of your available credit.

3. Save Up for Down Payment and Closing Costs

The more money you have for a down payment, the lower your interest rate will be. If you can make a 20 percent down payment on the home, you’ll likely avoid paying private mortgage insurance (PMI) and get the best rates. In addition to your down payment, save up for closing costs. These are fees charged by the lender, and they usually are anything between 3 percent and 5 percent of the loan amount.

4. Shop Around

Not all lenders offer the same rates, so it pays to shop around for the best deal possible. When you compare mortgage offers, look at the interest rate and the annual percentage rate (APR). The APR includes the interest rate plus other costs, such as broker fees, discount points, and origination charges.

Want to Buy a Home in Texas?

The best mortgage rates aren’t always available to everyone. But if you have the time and patience to shop around, compare offers, and negotiate with lenders, you could save thousands of dollars over the life of your loan. And if you are shopping around for a home in Texas, we’d be happy to help you find your dream home. Feel free to contact The Schrader Group at (210) 257-9788 or (210) 729-6099.