Buying a new home costs a lot of money, however some of that outrageous expense can be reduced if you research and do your homework.
Buying a home, of course, is a major investment. In fact, buying a home may end up being the largest investment you will ever make. Saving money on a home loan is highly advisable and is easier than you may think.
Only apply for a home loan if you have a high credit score. Higher credit scores equate to lower interest rates, thus saving the home owner thousands of dollars over the term of the loan.
Check your credit report before you apply. This is also common sense. The credit report will inform you on how good your credit score is and if there are any mistakes in the report. Remember, credit reports are the primary way banks can decide if you are responsible and trustworthy or not.
Pay down your credit card balances and make your payments on time. Those two factors influence your credit report more than anything.
Always shop around and collect more than one home loan quote. Lending is a competitive business, so consequentially lenders compete for your money. They are always willing to lower their quote if a competitor is bidding for your service. Use this benefit to your advantage.
It’s always advisable to ask the seller to pay your closing costs. Selling costs are expenses paid when you obtain the home loan. The selling costs can range between 3-7% of the total home’s value, including points, taxes, title insurance, financing, and other settlement costs.
If you ask the seller to cover your home loan closing costs and they refuse, then ask the lender to negotiate a lower rate on the closing costs with you. This is also something you should inquire about when shopping for the best home loan rates because closing costs can add a lot of money to your mortgage costs.
While buying a home and obtaining a home loan can feel overwhelming at times, there are ways to cut costs and save money on your home loan. Do your homework and earn the best grade possible!
Tom Martens is the content coordinator for South Arica?s leading Homeloans portal which amongst others offers Bond origination services for all major banks.
