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Wednesday, January 16, 2013

5 Ways to Save on Your Home Loan

If you're in the market to purchase a house, hopefully this guest post will give you some good tips to help you save money on your mortgage.

Home loans are just one of those necessary evils for most people. Unless you can save up the cash to pay for a home outright, you will probably need to find a lender that offers a home loan you can afford. With that in mind, hopefully you can save time on the next go around. Here are five ways to save on your home loan.

What Makes You Special
The first thing you can think about when shopping around for a home loan is what is special about you that could help save you money. Some home loan companies will offer interest rate deductions for a variety of reasons. There are even special programs based on different careers.
For example, where do you work? There are special home loan programs for careers like teaching or even if you were/are in the military. Public service jobs have a bunch of lesser known benefits like this.
Feel free to ask each company representative what discounts may be available to you. You may be surprised.


Great Credit
Do you have a clean mortgage and credit history? Normally, you can only get the best home loan rates if you have a history of being an excellent borrower.
If your credit is lackluster right now, try improving it before you start your house hunt. This will literally save you thousands and thousands of dollars in interest over a 15-30 year period. The worse your credit rating is right now, the longer it will take to get it in the green, but it is possible to improve it. The number one thing to concentrate on is paying all of your outstanding debts on time consistently. If you just have a lack of credit history, try opening a few credit accounts with stores or actual credit card companies, make your regular purchases, and pay off the balances completely and on time every month.
The general point is that the better your credit rating, the better your interest rate. And since a 0.5% difference can be tens of thousands of dollars over a 30 year term, you will want the best rate possible.

Choose the Highest Realistic Down Payment
A tried and true method of lowering a home loan payment is putting as much down as you can realistically afford. That means that you would pay more up front in cash to have less principal in the loan that you will owe interest on. What you should concentrate on in this respect is to choose the highest down payment that you can pay up front without hurting your other current goals.
For example, putting down 20% is usually an easy way to skip paying additional fees like PMI, plus you will be borrowing less cash overall and save on that interest. It’s a balancing act of figuring out what you can afford now to save money over the term of your loan.

Compare Apples to Apples
The biggest mistake you can make when shopping around is to get quotes that weren’t all based on the exact same information. Remember to write down all of the options you chose to go with on the first home loan quote so that all of the other quotes that you request will be based on that data too. Otherwise, how will you know which lender was truly offering the best deal for you?

Get Multiple Quotes
It may seem completely obvious, but you have to remember to get more than one or two home loan quotes. There are several online comparison sites that can help you get multiple home loan quotes at one time. A good example of such service is iselect in Australia they compares over 25 home loan lenders instantly and for free! Or you can call around and work directly with representatives on the phone. Whatever your preference, just make sure to get at least a handful of options.
Getting the best deal on your home loan can save you a ton of money over the life of your mortgage. If you have a plan of attack, it should be less painful to find a great deal. Good luck!

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