Whether you are about to get your first mortgage or are a seasoned pro, there are many tips you can use to keep your mortgage rates low and your total costs related to the mortgage note low. Many of these tips only take a few minutes, but they can save you thousands of dollars over the life of your mortgage.
First, just like when you buy anything else, look around. Talk to a number of lenders and brokers about what they can offer you. Even when the economy is bad, there is usually a lot of competition between mortgage lenders. If your credit score is great, mortgage companies will often want your business no matter what the economy is doing and will fight for it, which is always good for you. Some people went to mortgage brokers to help them find a good deal. Brokers don't give you the money directly; instead, they work with lenders to find you the best deal. But it's important to find out how they get paid and who they work for. You want to find a broker who can work with many different lenders and isn't paid by the lenders (at least not totally). This makes sure that they are looking out for your best interests and not just their own money.
Next, make a list of all the costs and fees that come with the mortgage. Don't be afraid to ask why fees are being charged or to ask that they be lowered. Most of the time, you won't be able to change every fee, but you might be surprised by how much you can change just by asking. Be on the lookout for fees that seem very high and out of place. Don't let outrageous fees eat up the money you save on interest.
Keep an eye out for PMI! PMI, or Private Mortgage Insurance, is usually needed if you own less than 20% of your home outright. It's a policy that protects the lender in case you don't pay your note. It's one of the many reasons why you should always try to make the biggest down payment you can comfortably afford. If you can only put down, say, 18% of the price, talk to your lender about getting rid of PMI. The 20 percent rule is not set in stone, and mortgage lenders will work with people who have a good track record with their money.
It's important to lock in the mortgage once you find the rates and terms you like. Always get everything in writing. Verbal agreements aren't good enough. Interest rates can change overnight, and when it's time to sign the final papers, fees can mysteriously go up. If you lock in rates and other fees now, you won't have to go through all of this again when it's time to close.
