When one begins hopping for a mortgage, their first priority is often to simply secure the loan at any cost. They often have the dream of owning a home so firmly planted in their heads that little things like interest rates don't factor into the decision. After all, finding a loan can be hard enough, finding one with a low interest rate just makes the task that much more daunting. Unfortunately this mindset can lead to unnecessary costs and even to serious financial problems in the future. The decision you make on a mortgage will stay with you and affect your life for 30 years or more. It needs to be made wisely with a minimum of emotion.
Options are available in the market, but you usually have to look for them as lenders will prefer that you accept a less favorable deal. But above all, they want to lend you money; that's their business. Knowing a few techniques and procedures can help you avoid the high interest mortgage trap and save thousands of dollars over the next decades.
The first step is to understand your credit power. Banks base interest rates off a variety of factors, one of which is a borrower's potential risk to the lender. If you go into your loan search with a high credit score and a clean credit record, your bargaining power will be better. If you have blemishes on your record, you should try to get them cleaned up before going into negotiations. Some things take time to correct so don't put this step off. Get started today so that you will be ready when the time comes.
Learn about points and how they apply to interest rates. You can often reduce your rate and overall cost of the loan by purchasing these points up front. If you can afford to do so, adding a few points to your loan can shrink long term interest rates by up to 3%, saving a bundle.
If you think it possible, consider a 15 year mortgage over a standard 30 year loan. Interest accrues over time, and by chopping off 15 years of interest payments, you will save a lot. You will of course have higher monthly payments, but if you can afford them, this is the way to go.
Last of all, shop around. Just like anything else, banks are in competition and want to get your business. By playing the banks against each other you can cut your costs. Once again, the banks want your business and they will often make you deals to get it.
Don't forget the importance of research. The market is a changing entity and if you can spot trends, you can choose the best time to secure your mortgage and thus the best interest rate. A little education can go a long ways.
Options are available in the market, but you usually have to look for them as lenders will prefer that you accept a less favorable deal. But above all, they want to lend you money; that's their business. Knowing a few techniques and procedures can help you avoid the high interest mortgage trap and save thousands of dollars over the next decades.
The first step is to understand your credit power. Banks base interest rates off a variety of factors, one of which is a borrower's potential risk to the lender. If you go into your loan search with a high credit score and a clean credit record, your bargaining power will be better. If you have blemishes on your record, you should try to get them cleaned up before going into negotiations. Some things take time to correct so don't put this step off. Get started today so that you will be ready when the time comes.
Learn about points and how they apply to interest rates. You can often reduce your rate and overall cost of the loan by purchasing these points up front. If you can afford to do so, adding a few points to your loan can shrink long term interest rates by up to 3%, saving a bundle.
If you think it possible, consider a 15 year mortgage over a standard 30 year loan. Interest accrues over time, and by chopping off 15 years of interest payments, you will save a lot. You will of course have higher monthly payments, but if you can afford them, this is the way to go.
Last of all, shop around. Just like anything else, banks are in competition and want to get your business. By playing the banks against each other you can cut your costs. Once again, the banks want your business and they will often make you deals to get it.
Don't forget the importance of research. The market is a changing entity and if you can spot trends, you can choose the best time to secure your mortgage and thus the best interest rate. A little education can go a long ways.
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