09/22/2010 If you want to take advantage of the lowest mortgage rates, you need to know a few things. These six tips will help you save money on your home mortgage.
1. Start with a good credit score. If your credit score is poor, don't try to buy a home. It won't be a good investment. A poor credit score will get you a poor mortgage rate. You'll end up paying through the nose for the next thirty years. An FHA mortgage can help alleviate some of this disadvantage, but the best thing to do is take a year and rebuild your credit score. Then apply for a mortgage.
2. Find the lender who can meet your needs. Don't just call the biggest lender. Don't call the lender or bank that comes to mind when you first think "mortgage." Chance are, the bank you're thinking of isn't the one that can serve you best. Compare mortgage lenders before you pursue a deal.
3. Compare mortgage packages. This is half the work of getting a mortgage. It's just like shopping around for any other item, but many homebuyers don't take the time to do it correctly. This is the only way to find the best deal available. Compare mortgage rates, compare loan terms, compare closing costs, compare points and prepayment penalties. Compare everything, and go with what's best for you.
4. Ask for a good faith estimate. A good faith estimate is a document that breaks down all the costs involved with the mortgage loan. Lenders are required, by law, to provide this document to you if you request it. Don't move forward until you've seen exactly what the hidden costs are going to be.
5. Negotiate with your lender. You've seen the good faith estimate. You know exactly what it's going to cost you. Now take some time and negotiate with your lender. Will a higher down payment get you a lower rate? How much higher? Is the lender willing to pay insurance costs? Negotiate. Most lenders will work with you to meet your needs.
If you follow these five steps, you'll get the best deal available and you'll save considerable money over the life of your loan.
