Your home is the biggest purchase you will ever make. This calls for a lot of smartness and wise moves, especially when you plan to avail loan instead of doing the entire transaction in cash. It is because qualifying for a loan is one step, and having the financial capability to pay off the monthly mortgage payment is another. With a lot of other critical expenses on your part as a homeowner, the repayment may get on your nerves.
However, there are ways of getting rid of your house payment early and save money on interest. That allows you to own your home outright and redirect your savings to invest in better flooring options or luxe interiors. Sounds interesting, right? Now let us discuss how you can make that happen. Here are some easy tips to help you save your hard-earned money over the life of the loan:
Improve your Credit Score
This can be a difficult thing to do but maintaining a good credit score will actually help you qualify for most of the mortgage programs you are looking forward to. It also makes you eligible for a better interest rate that is otherwise not possible.
But, the FICO score, which used in the mortgage industry, has to be well-evaluated before you apply for a home loan. So, use a loan calculator to gauge your credit score range first and then search for the interest rate you can be offered for that range.
Schedule Meeting with Multiple Brokers/Lenders
Having a face-to-face meeting with several lenders will give you better clarity on your borrowing situation. You don’t need ten different inquiries, a detailed discussion for loan options with at least 4-5 different lenders.
That way, you will understand the complete application process and get a feel which lender is best for you. Besides, you can land up with great deals and the best mortgage rate available in the market.
Make Additional Payments Each Year
If your pocket allows you so, make an extra mortgage payment every year applying to your principal amount and not the interest. With that, you will be able to reduce the balance to be paid and also cut down the term of your loan.
You can also consider making a lump sum payment or even pay a good down payment so as to save hundreds of dollars over the loan term.
Refinancing of Existing Mortgage
Another hassle-free way of saving money on your mortgage is by refinancing it on a lower rate of interest. In those ways, you can bring down the spending on monthly interest payments and also extend your payoff date past what it currently is; hence, paying less each month.
Of course, there are some fees associated with refinancing, but your savings will be enough to cover it in the upcoming months.