Your mortgage payment is one of the largest expenses you’ll face, so it’s essential to save money on it. Lowering your monthly payments not only reduces interest payments over time but can add up to thousands of dollars in savings over the course of your loan.
Finding a Low Mortgage Rate
There are multiple ways to get a lower mortgage rate. The first step is getting a quote from a lender who provides mortgages tailored for your situation and budget. Comparing rates across multiple lenders will guarantee you’re getting the lowest possible rate.
The lender should provide you with a quote that includes all fees and costs related to your loan, such as points, lender fees and closing costs.
You can ask the lender to include discount points, which are an upfront fee that can reduce your mortgage rate by a certain percentage. By adding these points onto your rate, it will reduce overall repayment amounts over the life of the loan.
Make Biweekly Payments
Making biweekly mortgage payments is another effective way to save on your loan. Each extra payment applied annually goes toward decreasing the principal balance, decreasing interest payments over the life of your loan.
This strategy can help you pay off your mortgage faster, saving thousands of dollars in interest over the course of your loan. But be sure to double-check with your lender first; some companies charge fees for making biweekly payments, so make sure there aren’t any extra costs added on top of regular monthly payments.
If you have a conventional mortgage and don’t put 20% down on your home purchase, your lender may require you to pay private mortgage insurance (PMI). However, you have the option of cancelling this policy at any time by paying them an amount in full.
To determine how much it would cost to cancel a policy, speak with your lender. Additionally, request an assessment of current coverage to determine if you are overpaying.
Negotiate a Lower Mortgage Rate
If you possess strong negotiation skills, they can be used in your favor when searching for a new mortgage. This is especially true if the loan with a lower interest rate than what you currently have is being considered.
Start by asking your current lender for a quote on a new mortgage with the same terms as your current one, including the interest rate and other fees. Doing this allows you to compare options and potentially negotiate a better mortgage rate that could save thousands of dollars over its lifecycle.
Remember, lenders may offer you a better rate if they can convince you to accept multiple fees and charges that they do not provide, like credit report or title insurance. Those costs could add up to thousands of dollars over time, so be sure to negotiate them down when receiving your mortgage quote.