How To Slash Your Mortgage Costs

---

Let’s Learn How To Tighten Your Wallet

Ready to plunk down your hard-earned cash for a slice of the American pie? Make sure your financing is low fat.

Buying a home is likely the most expensive, long-ranging financial commitment most of us ever make. The more homework you do before heading out with a real estate agent or before making an offer on a home, the more likely you are to stretch your mortgage budget.

Here are 5 ways to get the most “bang for your buck” when getting a mortgage:

1. Get pre-approved… for your mortgage, rather than just pre-qualified. With a pre-approval, the lender pulls a credit report, verifies a borrower’s income and takes other preliminary underwriting steps to come up with a maximum allowable loan amount, which usually doesn’t change. The lender also commits, in writing, to making that loan if a purchase occurs within a set amount of time. In a pre-qualification, the customer provides the information, but the lender doesn’t check it and there’s no assurance that the loan will be approved.

Pre-approval requires you to fill out a loan application and provide supporting pay stubs, bank statements, employment information and W-2 forms. Most Lenders charge for the service -- generally from $20 to $50 -- but it’s worth it.

Also pre-approval puts you in the strongest possible bargaining position with sellers and their real estate agents. Those who are in a hurry to move a property often will accept a lower bid from a pre-approved buyer because they can be certain the deal will go through. To learn more, go to blubridges.com.

2. Check out ARMs

Short on cash? Consider an adjustable-rate mortgage. An adjustable rate mortgage, called an ARM for short, is a mortgage with an interest rate that is linked to an economic index. The interest rate, and your payments, are periodically adjusted up or down as the index changes.

If you want more information about ARMs, go to blubridges.com and download the free report, “Save Money With Adjustable Rate Mortgages.”

3. Float a balloon

Balloon loans are another option available to get a lower payment in the first few years. These mortgages charge less interest upfront for a set time frame, but require the borrower to either refinance at the end of that period, pay off the loan or convert it to a fixed payment schedule. On a seven-year balloon loan, a borrower might make payments of principal and interest for that period. Assuming rates didn’t shoot up more than 5 percent in the meantime, they might then be able to pay just $250 to roll the loan into a fixed schedule for the last 23 years.

4. Buy down the rate

If you’ve got the cash now and want to lower your payments, you can “buy down” your mortgage rate. It’s a simple concept, really: In exchange for more money upfront, lenders are willing to lower the interest rate they charge, cutting the borrower’s payments.

Buydowns can be temporary or they can last the life of the loan. The purchaser can negotiate the deal directly with a lender, but sometimes a home seller arranges the buydowns as an incentive to attract buyers.

5. Trim closing costs

Of course, the mortgage rate isn’t the only thing that determines how much financing will set you back. Closing costs add a significant chunk of change to the final bill, so you should try to minimize them, too. How?

For starters, you shouldn’t overshoot your budgets because the cheapest lenders often have the most conservative underwriting standards, so you can end up paying less in origination fees by showing some restraint.

As an example, say you had $52,500 available for a down payment to buy a $150,000 home. You might be able to qualify for a loan with just $1000 in origination fees because the broker’s cheapest lender cuts deals for people who get mortgages for only 65% of their home values or less.

But if you fell in love with a $240,000 home and refused to let it go, you’d be getting a mortgage at about 78 percent loan-to-value. That’s still conservative, yet maybe not enough so for the cheapest lender. The broker ends up having to find another company willing to provide the money, and that company might charge $1650 in fees.

The same rule applies to other qualifying factors, such as credit. If a credit report costs $100 at one shop and $20 at another, but the second lender’s deal is better overall, point out the discrepancy and ask the preferred company to lower its charge.

Well, I’m glad I had the chance to help you. By the way, one of the main reasons I wrote this free report was to become your family mortgage consultant. Just as you have a family doctor, dentist, and lawyer, I want you and your family to come to me when you have mortgage needs. So, please don’t hesitate to contact me or go to blubridges.com to learn more about the “ins… and outs” of mortgages.

Have a nice day.

Regards,

Bruce

DISCLAIMER: Although the author/publisher has made every effort to insure the accuracy and completeness of the information herein, neither shall be liable for errors, omissions, inaccuracies or inconsistencies. Nor is it the intent to act as legal counsel.

---

---

Comments? Questions? Email Here

© HowtoAdvice.com