Getting a home loan can be a complicated and busy process. When borrowers get caught up in the moment, they often forget to look for better deals.
How to save money on your mortgage
Getting your interest rate lowered is the best way to save money on your home loan. Even a quarter point cut in the interest rate can save tens of thousands of dollars in interest payments over the life of a loan. Interest rates are too high, but lenders don't want to lower them. The only real thing you can do is tell them straight out that you will go somewhere else if they don't lower the prices. Now that the real estate market is slowing down, lenders are more open to these ideas because they don't have as many loans coming through the door. If the market starts to heat up again, you can forget about this position.
If you want to get the interest rate lowered, information will help you. You will have a lot more luck if you can show the lender that another lender is offering a better rate. Look for ads that other lenders have made for the same or similar loans.
There is really only one sure way to lower the loan's interest rate. It's all about points. If you have a lot of money when you apply, you can try to lower the interest rate by paying more points up front. Lenders are open to this idea, but most people don't have a lot of money lying around. Most of the time, it's hard enough to get enough money for the down payment. Still, you can save money on your mortgage in other ways.
If a lender is charging you points on your mortgage, you should try to negotiate them down. Lenders view points in a more flexible manner. The more money you save with a reduction in points, the more money your home is worth. If nothing else, you have nothing to lose by asking for a quarter or half point off.
When you apply for a mortgage, it's important to get the best deal you can. Even small concessions from the lender can save you tens of thousands of dollars over the life of the loan.
