Dont Settle Pay Less For Your Mortgage
(Everyone wants to save as much money as possible on their mortgage but are usually too tired from the whole process to do anything about it. )
Taking out a mortgage is stressful; from hiring a reputable lender to finding the suitable loan program. When it comes time to finalize mortgage terms and rates, trying to save an extra buck or two is usually not worth investing more time. You just want to get approved and move in.
The article, "4 Gems to Save Thousands Off Your Mortgage," written by Chris Suffern and posted on ezinearticles.com, offers a few easy ways to get your mortgage for the best possible value.
The first thing you should understand is that mortgage loans and rates are flexible and open to negotiation.
"Most people don't think of negotiating a better deal when it comes to mortgage fees and interest rates. For some reason we tend to believe they are carved in stone. Like any business after a profit, the banks are willing to negotiate. They would prefer to have your business at a reduced profit then see you go to one of their competitors. A little profit is better then none at all."
Now that you know this information you can use it to your advantage. Ask for a discount. Even the smallest monthly discount can add up to thousands of saved dollars over the life of the loan.
But the most savings come from the interest rate you pay. There are several options that are offered or talked about by your lender that can affect and save you money on your loan. While some of these things have validity, a lower interest rate is the sure way to save thousands on your mortgage.
"For example: Someone borrowing $212,000 at 7.32% for a 25 year term will pay back $462,536 over the life of the loan. Now imagine the same loan except this time at an interest rate of 6.70%. The total amount paid back by the end of the loan is $436,963. That's a saving of $25,573, a substantial and rewarding difference for securing a lower interest rate."
A popular way towards achieving a lower interest rate is to pay down extra points. A point is equivalent to one percent of the entire loan amount. For example, one point on a $100,000 loan is equivalent to $1,000. This fee is payable directly to the lender, upfront, in exchange for a lower interest rate. One point is roughly equivalent to a savings of .25 percent off your interest rate. So, instead of a rate of 7 percent, you would get a rate of 6.75 percent, which would save you about $20,000 over the life of the mortgage.
The third thing to consider when figuring out finances for a mortgage is assorted fees. While the interest rates are the most important, weighted factor of a mortgage, do not disregard fees such as keeping, redraw and break fees. All of these add up to a considerable amount.
A low interest rate with hefty fees can actually end up costing you more than a loan with a higher rate and lower fees. Do not get caught off guard.
The fourth "gem" to use in order to save thousands of dollars on your mortgage is to realize the possible negative financial impact of mortgage reduction schemes. "Mortgage reduction schemes have come into the home loan market more as a marketing and profit tool for the lenders and brokers then for the benefit of the borrowers. Some charge ridiculous upfront and ongoing fees, and in the end have little or no benefit for the buyer."
These schemes are usually accompanied with promises of huge savings, with little explanation.
So, in order to protect yourself from losing thousands of dollars on your mortgage, take your time to understand as much as possible about the various programs and the mortgage process in general.
You will regret rushing into a mortgage only to later find out that if you took an extra moment to read the stipulations in the contract, you would have realized that you were being duped into paying much more than you intended.