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You Can Save Money On Your Mortgage Five Great Money Saving Tips
Author David Schneider | May 23,2007
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Getting a mortgage can be one of the most important financial decisions of your life. You've probably planned for some time before taking this big step towards a secure and prosperous future for yourself and your family and you want to do it right. One of the most critical things to consider when planning your mortgage is making sure that your mortgage doesn't cost you a dime more than it has to. Here are five easy ways you can save money on that mortgage.
Improve your Credit Rating
Lenders determine your interest rate based on the perceived risk to them. The better your credit score is, the less likely the lender is to see you as a danger to default, and the more desirable a borrower you are. If your credit score is a little low, take a few months to budget, pay down some credit cards, and nudge that score towards the 800 range. With the improvement in rate you can get from a positive credit report, the steps you take to improve your credit will soon pay for themselves.
Get a Fixed Rate Mortgage
A fixed rate mortgage isn't right for everyone, especially if buying a new home has stretched your budget to the limit. However, over the long term, fixed rate mortgages usually yield a lower total interest across the life of the loan. If you can afford the fixed rate mortgage, you should probably go for it, even if it costs a little more today.
Pay More Than The Interest
Your interest builds up every month on the principal amount of the loan. The faster you pay that amount down, the less interest you will pay. Even if you have opted for an interest only loan to save costs, if you have the option to pay some of the principal down in any given month, you should take it.
Avoid PMI
Private Mortgage Insurance is insurance that you have to pay to protect your lender against you defaulting. PMI only applies if you are taking out a mortgage for an unusually high percentage of the home's sale price. Pay as much money down as you can, and if you are facing PMI, see if you can get a second mortgage to break up the loan amount. This will avoid the need for Private Mortgage Insurance and save you money.
Do Your Research
Different lenders have different ideas on how to serve you. They may also have different rates, options and fees. The only way to know which lender is the best one for you is to compare them. Researching and comparing mortgage options is no longer the chore it once was. In fact, if you go to quotematch.com and fill out their simple form, you can get quick, easy access to rate quotes for the kind of mortgage you need. Once you know your choices, you can get the best, most economical rate.
Don't make the most important financial decision of your life in haste. Consider the options above and make sure that you apply every money saving option you can. With the right approach, you can end up saving thousands on mortgage payments. |
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