Buying a home is the cherished dream of every family. With socio-economic drift inflicting most of the economies in the world, the price of land and homes are sky-rocketing to an all-time high. Hence this dream has become quite tough to realize. However, a lot of people still manage to turn this dream into reality with the help of mortgage. At the same time, everyone who buys home on loan wants to save as much money as possible while doing so. Let us look at some ways to do the same.
Choose the Right Product
This is important and tricky. While it is true that a 30-year mortgage with a fixed-rate results in the largest total payment for any loan over its total life, still it is for a very important reason and this has been the preferred option since decades. It is the most stable and secure way of buying a home on debt.
Before signing up for a hybrid/ fixed / adjustable plan or an adjustable rate, it is important that you run the numbers thoroughly. Is it really possible for you to afford monthly payments when the interest rate resets in five years or worse in less? Do factor in the fact if it’s possible that the worry that you might not be making more money eventually than you currently do bothers you?
Agreed that the credit market doesn’t like to negotiate irrespective of how well it is doing. Still there’s always scope of negotiation for better rates. This will be easier if you try and negotiate with multiple lenders, because it will help you browse through the variety of economical options available in the market.
Further you can negotiate for fee waivers like lender’s attorney fee or document preparation fee etc. This further includes appraisal fee, processing, title fee, credit report fee and so on. Private mortgage insurance fee, inspection fee etc. are all up for negotiation. Your credit scores play a crucial role, especially, if they’re good.
Make Extra Payments
Any extra money that you pay directly contributes towards the principle of the loan. This means that your extra payments help you knock down the actual principle and the bulk of your money does not go towards paying the interest alone. In fact if you make one additional payment for your debt every year, it is possible to reduce your mortgage by almost 10 years.