Save Money on Mortgages
Don't Overextend Yourself
Be certain that you are in a good financial position to buy a home. If not, consider renting until you're confident you can pay off the mortgage. One thing the recent financial crisis has taught us is to never make a purchase assuming housing prices will continue to rise.
Refinance When Rates are Low
Refinancing when mortgage rates fall may say you thousands of dollars. Be sure to talk with your mortgage broker to decide whether it is right for you. There are some easy-to-use calculators on the internet that can give you an approximate answer as well.
Avoid Interest Only Payments with Adjustable Rates
Interest-only (I-O) mortgages allow you to only pay only for the interest for a period of time. After that, your monthly payment rises when you start to pay off the loan amount as well. When this is coupled with an adjustable-rate mortgages (ARM), problems can arise if the interest rate rises as well.
Avoid Unnecessary Closing Costs
Sometimes a bank will offer a lower interest rate but then add additional closing costs to make up the difference. Watch out for excessive administration, processing, or underwriting fees.
Make Extra Payments
If money is available, consider making extra payments to pay off your mortgage faster. This lowers the amount you of interest you must pay over the term of your mortgage. Even small payments can save your thousands of dollars in interest.
Beware of mortgage websites and brokers. Often they will direct you to the highest paying company and not the mortgage that is best for you.