How can you save money on a home mortgage loan?

Answer 1

Here are some tips for saving money on your home loan:

Although your monthly payment may be higher, you can save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford. On a $100,000 fixed-rate loan at 8% annual percentage rate (APR), for example, you will pay $90,000 less in interest on a 15-year mortgage than on a 30-year.

You can save thousands of dollars in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15-year, $100,000 fixed-rate loan, just lowering the APR from 8.5% to 8.0% can save you more than $5,000 in interest charges. In this example, paying two points instead of three would save you an additional $1,000.

If your local newspaper does not periodically run mortgage rate surveys, call at least six lenders for information about their rates (APRs), points, and fees. Then ask an accountant to compute precisely how much each option will cost and its tax implications.

Don't be afraid to check out non-traditional lenders. Often the fixed cost of your local bank branch makes their mortgage rates higher than an internet-based provider.

Be aware that the interest rate on most adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the loan. An increase of several percentage points might raise payments by hundreds of dollars per month.

The above information is excellent, and is a great way to pay less on your mortgage. A way to pay off your mortgage in half the time without changing your current monthly payment, however, is to get a Cash Flow account. By paying less in interest and more in principle, and because your principle will earn interest, you will be able to pay off a 30 year mortgage in about 15 years or less. If you keep your Cash Flow account for the whole 30 years, you will actually have over $1 million that you can use to pay off your house, and use the rest to retire or pay for college funds or invest or whatever.

NewHow to maximize your saving depends on your situation. You have to ask yourself, how long will I be in this property?

If you plan to retire and live in the house forever please PAY POINTS. If you are going to repay your entire mortgage is it almost universaly better to pay extra points upfront to "buy-down" your interest rate. Try to obtain the lowest fixed-rate mortgage loan you can afford to buydown. Since you usually payback three times the amount of the original balance over the life of the loan, it will be better to pay some extra upfront points to save much more in interest payments over the life of the loan. Also, Discount Points used to buy-down you interest rate are tax-deducable.

Conversely, if you plan to only be in the property for a limited number of years, DO NOT PAY POINTS. Since you will not have the loan for very long, frequently the monthly interest saving will not be enough to cover the initial invest towards points. To compensate, try to obtain a short-term adjustable rate mortgage (ARM) with an initial fixed period of the same length you plan to be in the house. For instance, if you plan to sell the property within the next three years, take out a 3-year or 5-year ARM. These loans will have a lower interst rate than there fixed rate counterpart.

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Guide to Mortgage RateMortgage rates or the interest rates for home loans are affected by a variety of factors. More often than not, they are influenced by supply and demand. A strong economy results in more borrowing which in turn results in higher interest rates. Conversely, with the softening of an economy, borrowing goes down and so does interest rates. The Federal Reserve can also influence interest rates through raising or lowering the discount rate which is the interest rate banks are charged when they borrow money from the Federal Reserve.

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