How To Save Money On Your Mortgage

1. Shop Rate!

Sometimes the obvious just needs to be stated out loud: Lenders do not charge the same rate. Some charge more, and some charge less.

• Obtain several loan offers for consideration, and compare the rate.

• If a lender offers you an unusually low rate, check for fees, points, and additional charges or changes in terms.

• Don't fall into the trap of just going with the largest bank on the block. Do your homework and check your lender's background and reputation, but open your doors to all the choices that are available to you.

Obtain 3 or 4 loan offers, and check to see how the rates being offered compare to the current interest rates. Our website offers a directory of resources and a ratewatch, and there are many other websites available to you through your favorite search engine that offers similar, free information.

2. Shop Fees!

Lenders charge different types of fees in varying amounts. You may see them stated as "points", "origination fees" or "costs". Whatever name is used, they represent the lenders' profit. Some lenders are willing to earn less, and some lenders' charge more in fees.

• Obtain 3 or 4 loan offers and compare the quoted closing costs.

• If you see unusually low interest rates, check to see if there may be unusually high origination fees or points being charged.

• If you don't see any fees or points being charged, then check the rate and terms of the loan to see that it meets with your satisfaction.

Always compare fees and rates in conjunction with one another, and never settle for just one loan quote when shopping for a mortgage. Your home loan is just too important not to do your own homework.

3. ARMS:

An adjustable Rate Mortgage, in the right economical climate, can be an excellent way to lower payments.

• With an ARM, the lender agrees to charge you a lower interest rate. This can save you hundreds of dollars off your monthly payment.

• Often times an ARM carries a fixed period where the rate cannot change, such as one year for example.

• If interest rates stay low, then an ARM can offer you an attractive way to obtain affordable real-estate and save money.

A word of caution: There are many variables to consider with an ARM, and it is important that you understand them before signing on the dotted line. Our website has an excellent article available to you; entitled "Is an ARM Right For you?" should you wish to explore this option in further detail.

4. Balloons:

Another way to lower your monthly house payment is by structuring your loan using a Balloon, or by "floating a balloon".

• The loan is amortized over a given period, say 30 years, but there is a final lump sum due at the end of a fixed period, and this is called the "balloon payment".

• This fixed period is typically between 5 to 10 years.

• This type of loan lowers your monthly payment, but be prepared to make new decisions when the fixed period is up, because your loan ends at that point.

Consider floating a balloon with caution, of course. Use this to compare against ARM loan products, to determine which one may be right for you.

5. Interest Only:

With an Interest Only Mortgage, you are only obligated to pay interest.

• This first phase of the loan, interest only obligations, is typically 5 to 10 years.

• After that, the loan is fully amortized for principal and interest.

• So, for a 30 year fixed, that would mean that interest only payments are available the first 10 years, and then principle plus interest payments must be paid for the remaining 20 years.

• Typically, this type of loan is very attractive for folks in commission-based employment, or where revenue is cyclical. In other words, you can up your payment to pay off principal, when it's most convenient for you.

Once again, this is an excellent loan product to lower monthly payments, and it can be compared to ARMS and floating Balloons.

6. Incentives:

Are you in the market for a brand new home? If so, check to see whether or not your builder offers incentives, such as the following.

• The builder may pay additional points to help you lower your rate.

• The builder may offer cash-back credits.

• The builder may offer savings if you go through their own or recommended lender.

Builders are motivated to get their homes sold, so of course they can go build more. This allows you an opportunity to save money either in the purchasing of the home, or the back-end closing costs.

7. Closing Costs:

Take a look at all your closings costs, to see if there are additional savings that can be made:

• PMI: Property Mortgage Insurance is typically required when you have less then 20% to put down. However, laws change all the time and homes can rise in value quickly. Check to see whether or not you have the right to have the PMI removed now or down the road.

• Discuss all the closing costs. Find out whether some of them may be negotiable.

• Review the charges for a variety of other significant closing costs, such as Title Fees, Credit Reports, etc., and compare with your other loan offers.

We've enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.

Publisher's Directions:

This article may be freely distributed so long as the copyright, author's information, disclaimer, and an active link (where possible) are included.

Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

About The Author

Copyright 2004, by LoanResources.Net

Tom Levine provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services. You can check out Tom's website here: http://loanresources.net, or you can email Tom at info@loanresources.net.

Related News

See if lender will let you pay insurance, taxes - San Francisco Chronicle See if lender will let you pay insurance, taxes San Francisco Chronicle,  USA -9 hours ago I almost feel like the mortgage companies are just trying to get extra money from us by having us refinance soon. Even in this economy, this house would ... Great Wolf continues mortgage negotiations - Wisconsin State Journal Great Wolf continues mortgage negotiations Wisconsin State Journal, WI -4 hours ago Because of the economy, refinancing arrangements are taking longer and are structured differently than in the past, he said. The resort continues to operate ... BRIEF: Great Wolf still talking with lendersTrading Markets (press release) all 3 news articles Bellingham man's adjustable mortgage became money trap - Bellingham Herald Bellingham man's adjustable mortgage became money trap Bellingham Herald, WA -10 hours ago Caceres said he got his first adjustable mortgage seven years ago and managed to refinance it twice since then, to get out from under the higher interest ... Wolters Kluwer Financial Services Begins Development of Hope for ... - MarketWatch Wolters Kluwer Financial Services Begins Development of Hope for ... MarketWatch -8 hours ago For borrowers who refinance under H4H, lenders are required to "write down" the mortgage to the Department of Housing and Urban Development (HUD)-provided ... Ben Bernanke: Fresh Attack on Mortgage Rates - U.S. News & World Report Ben Bernanke: Fresh Attack on Mortgage Rates U.S. News & World Report, DC -3 hours ago Lower rates will enable some borrowers to refinance out of adjustable and into fixed-rate loans. But those who need to refinance the most have homes with ... Looking to refinance? Now might be the time - Boston Globe Looking to refinance? Now might be the time Boston Globe, United States -5 hours ago Mortgage rates have been stubbornly high for quite some time but the government's recently announced $800B plan to bolster mortgages and consumer loans had ... Good time to refinance your mortgage? - WKTV Good time to refinance your mortgage? WKTV, NY -6 hours ago By GARY LIBERATORE (WKTV) - If you are in the market to buy a home, it's a really good time, but if you're selling, it's not so good. ... Mortgage rates fall, but many borrowers will have trouble qualifying - Los Angeles Times New Zealand Herald Mortgage rates fall, but many borrowers will have trouble qualifying Los Angeles Times, CA -Nov 27, 2008 Jeff Lazerson, a Laguna Niguel mortgage broker, said all the customer calls he received Tuesday were from people seeking to refinance, not buy homes. ... Mortgage-market revival: Try, try againCNNMoney.com Last Call for Smart HomeownersMotley Fool US move cuts mortgages to lowest rate since FebruaryBaltimore Sun Bloomberg - AHN all 2,144 news articles Treasury Yields Drop to Record Lows as Bernanke Cites Buybacks - Bloomberg Treasury Yields Drop to Record Lows as Bernanke Cites Buybacks Bloomberg -2 hours ago Traders speculate the Fed’s purchases may drive mortgage rates lower, causing homeowners to refinance and reducing the average maturity, or duration, ... REFILE-TREASURIES-Bonds rally, helped by weakening economyReuters TREASURIES-Bonds rally on weak economy, Fed fixed-income buysHemscott all 105 news articles Commercial loan "nightmare" projected for 2009-JPMorgan - Reuters Commercial loan "nightmare" projected for 2009-JPMorgan Reuters -7 hours ago He said the slowing economy that is wreaking havoc on cash flow expectations may also present mortgage companies with a dilemma as borrowers confront them ...