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5 Top Tips on How to Slash Your Mortgage Financing Costs
A mortgage is the largest financial commitment you are ever likely to make. We should all know that you have to search long and hard for the best mortgage rate and affordable fees and costs. But how can you slash your mortgage financing costs?
Here are five top tips on how to save on your mortgage financing costs:
Save for as large a down payment as possible
Its common mortgage financing sense. The larger a down payment you have, the less money you will need from a mortgage lender. If you already have a home and have built up a large amount of equity, use this as a down payment on your next home and you will need a much smaller mortgage
Having more cash upfront can help in other ways too. If you offer a mortgage lender more down payment than you originally discussed you can use this to barter down your mortgage interest rate. This will cut your payments.
Get pre approved
Pre-approval for a mortgage loan will give you greater bargaining power with realtors. As you can clearly show that you are in a string position to proceed, people who are looking to move quickly are far more likely to accept a lower bid and you could shave thousands of dollars of the cost of your new home and your mortgage financing need will be lower.
Check out Adjustable Rate Mortgages
There are two main types of mortgage financing available, fixed rate and adjustable rate mortgages. Adjustable rate mortgages tend to have interest rates between 1.5% and 2% lower than a fixed rate mortgage as they will fluctuate up or down in line with the market. If interest rates are low you can slice off loads of interest charged on the loan. However, you have to be prepared for the eventuality that if interest rates increase your monthly repayments will increase.
Costs associated with mortgage financing such as closing fees and credit reports can be sky high. Many lenders inflate these costs and pass this inflated price on to the consumer. Be savvy and obtain good faith estimates from a number of lenders. If you have found a mortgage program that you wish to apply for that has higher costs than others, show them the comparisons you have obtained. If they want your business they will probably reduce the costs!