If you’re thinking of buying a home soon, then it makes sense that you’ll want to get the most out of your money at the lowest possible cost.  This includes your monthly mortgage.  Since most people buy homes these days through mortgage loans, you want to know how you can get the lowest possible payment.  I recently read an article discussing five ways that, according to a realtor, you can lower your mortgage payment, which I’ve shared below:

Shop around: When considering a home loan application, lenders examine your income, assets, debt, employment history and credit record thoroughly.  Yet even though they’re all looking at the same information, they won’t offer the same terms.  If you want to figure out the best loan you can get, then do your homework and apply to several different lenders.  This could mean saving thousands as you get a loan with a lower interest rate or other favorable terms.  

Consider different types: Plenty of home buyers have heard that the 30-year fixed-rate loan is the only way to go.  It’s a common one for sure, but it isn’t the only option by a long shot.  If you expect a long career of increasing pay, then an adjustable-rate loan could also make sense.  These typically start at a lower rate, which can then fluctuate over time, allowing you to get a better home.  If you’re planning on staying in a home for less than five years, then the lowest interest rate product of the first several years could be the way to go.  

Watch interest rate trends: Since 2013 mortgage interest rates have been fluctuating around 3.5 to 4 percent for a year-year fixed-rate loan.  However, certain actions can slowly increase mortgage interest rates.  When the weekly difference is marginal, then the effect of locking in a rate isn’t that big.  The loan market is hard to predict, yet if rates go up over a long period of time, then you’ll want to submit your application and lock in an interest rate ASAP.  

Consider discount points: Even when you’re well-qualified and receive the best mortgage loan the lender has to offer, you can still take your interest rate down by paying discount points.  This involves paying a percentage point of the total loan at closing in exchange for the lender dropping your final interest rate.  While the standard drop is a quarter of a percent, lenders sometimes have flexibility in its terms.  

Eliminate private mortgage insurance: If the percentage of your loan in relation to the home’s value is over 80 percent, then you might have to pay private mortgage insurance (PMI), which protects the lender if the borrower defaults.  To avoid PMI, make a larger down payment of at least 20 percent of the home’s purchase price, or possibly get a second mortgage for the remaining percentage over 80 percent.  If neither is possible, then refinance as quickly as you can once your equity is above 20 percent.  

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