For most people, buying a home on a mortgage is one of the biggest investments they will make. Given this, it’s important to look for ways to cut costs on your mortgage. Let’s take a look at 5 important secrets that can help you save a lot of money on your mortgage.
Avoid Closing Your Loan at The Beginning of The Month
Although your mortgage lender may insist that you close the loan as soon as possible, it’s best that you wait till almost the end of the month to close it. Closing the loan early on in the month will mean you have to pay interest for those many days additionally. However, if you do so toward the end of the month, you’ll only have to pay a fraction of that interest for the month.
Lock in Your Interest Rate
Interest rates fluctuate from time-to-time, and no one, not even your mortgage lender, knows which way the interest rates are headed. So, while you may be getting quotes from different lenders, make sure to pay and lock in the interest rate with a particular lender if it seems competitive to you.
Making Bi-Weekly Payments Can Help You Save Money
Rather than make payments every month, consider making bi-weekly payments. If you do this, ensure that the lender put the extra payment toward the principal.
Refinancing May Not Always Be the Best Option
Many homeowners choose to refinance their mortgage if they find a loan with a lower interest rate. This, however, doesn’t always make sense financially. Say, you’ve paid off your 30-year loan for 15 years, and you are looking to refinance to another 30-year loan with a lower interest rate. Although the interest rate itself is lower, you will be restarting the amortization process and paying more interest over the course of the loan term.
Be Wary of No-Cost Loans
Many mortgage lenders advertise no-cost loans. Be extremely wary of such loans, since lenders who offer them usually roll the various costs into the interest rate. So, although you may not have to pay any additional costs, you will probably be charged a higher interest rate.
Make sure to keep these tips in mind when loan shopping!