Buying a home is one of the most significant investments that people make in their lives. As most people don’t have that liquid cash available to buy a house, they like to opt for a mortgage loan. With this, they can borrow a significant amount to fulfil their dream and then, spend years to pay it back. Moreover, they have to pay an interest rate over the course of the loan.

And as a difference in interest rates can help borrowers to save a lot of money, borrowers always try to ensure that they get the lowest mortgage rate possible. Are you wondering how to ensure the lowest mortgage rates in Houston? Well, follows these rules.

  • Show your income stability

Mortgage lenders prefer homebuyers who can show steady employment for at least the past two years. Long periods of employment will not be a good sign for you, especially when you want to get a home loan with the lowest mortgage rate. If you can show the lender that you are in the same job for at least two years or have made a job change to a higher paying position in that time, then it will be good for you. If you have a business, then show the document of your income tax return for the past two years. It will convince the lender that you will pay the loan amount on time, and so, they will be ready to lower the mortgage rate.

  • Build your cash reserves

Your cash reserves can also help you to get a lower mortgage rate. In the world of mortgage, cash reserves are measured in terms of the number of months’ worth of house payments you have saved in cash. The reserve includes money saved in your bank accounts, money market funds, or somewhere else. But it does not generally include funds in a retirement plan as that money can only be withdrawn after paying penalties and taxes. The general requirement for cash reserves on a mortgage loan is two months – as you should have enough liquid cash after closing to cover your new mortgage payment for at least 60 days. On higher-risk mortgages, the requirement for cash reserve may be higher.

  • Go for government home loan program

The government-backed mortgage loans are similar to conventional loans except the fact that conventional loans are not insured by the Government and so, they are slightly riskier. As the mortgage lender is guaranteed to get their money back if the borrower even defaults with a government loan program, they come with lower mortgage rates than conventional loans. Because of the flexible qualifying guidelines and low down payment requirements, FHA loans are one of the most used types of home loans nowadays. Moreover, you can get the loan with a low mortgage rate. If you are a vet, then you can opt for a VA loan. This loan offers 100 percent financing and low mortgage rates. So, by choosing a government loan program, you can get a lower mortgage rate.

You can also compare mortgage rates from different lenders, make a good down payment and do many more things to ensure the lowest mortgage rate in your home loan.

Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.