Important Home Financing Tips to Reduce Homeownership Costs

Being a potential first time homeowner places you in the driver’s seat by granting you the ability to receive state assistance, based on qualifications, delivered via programs uniquely designed to get you into that first home affordably. Review this and the other related tips that follow to bolster your mortgage education and become equipped with the tools necessary to maximize the financial saving of your new home acquisition.

  • Did you know that if you qualify for one of your state’s first time homebuyer programs, you might not need a 20% down payment? This amount may reduce drastically, depending on specifics of the program. Visit the website for your state’s housing finance agency to learn more and find out what is available.
  • Reputable lending websites, which offer free online quotes, should never ask for personal information such as name, address, or phone number. As long as you provide accurate information regarding your personal finances, they should easily be able to give you a quote. If asked for this information in the preliminary stages, go to a different website. These sites may be phishing for information for marketing purposes such as sales calls and junk mail.
  • Do not fixate solely on the interest rate you will receive when shopping for a mortgage loan. Consider things such as origination fees, closing costs, late payment charges, prepayment penalties, the APR, and the affordability of the monthly payment, as they play equally important roles in the evaluation of the mortgage packages.
  • When getting a mortgage, consider buying discount points, which amount of 1% of the mortgage amount. These points act as prepaid interest, which may buy you a lower overall rate and cover closing costs as well.
  • Did you know that your credit score plays a role in whether or not you get approval for a mortgage? Most lenders require a score in the mid to upper 600s before approving you for a home loan. It is important that you check your credit report well in advance of buying a home to give you time to dispute errors and work on increasing your score prior to applying.
  • Are you trying to save money to put a down payment on a new home? Begin saving money well in advance by budgeting. This includes looking at your weekly outflow of money and determining where you could save money. This includes spending on specialty coffeehouse coffee, eating out for lunch, or ordering in for dinner much too often. You may also find ways to cut back on bills. For example, change your cable service to a package that is less expensive. You may have fewer channels, but when you are living in your new home, you can change it back to your original package.
  • When going through the mortgage process, be sure to ask you lender how long it will take for everything to go through and become valid. If you have already placed a bid on a home and the process takes too long, you may lose your bid and loss the home of your dreams. Be sure that you act quickly and responsibly, and be sure to keep in constant communication with your lender and the seller.
  • Afraid you might have second thoughts about a home or mortgage once the contract is already initiated? You may have a certain number of days after approval to change your mind and get out of the home loan before facing penalty. Ask your lender about this grace period to be sure.
  • Be sure to check your mortgage documents for complete accuracy before signing. While you may be most concerned with making sure your lender is not charging any hidden fees and that your interest rate and payment information is correct, you may overlook other important information. Be sure your personal information, such as your income, is correct. Whether done purposely or by mistake, this error could be seen as fraud on your part.
  • Are you thinking about refinancing your home? While you may feel comfortable with your current mortgage lender, you should not feel guilty about looking elsewhere for a better deal. Often customer loyalty can result in a good deal the second time around, but if you can get a better rate from another lender, take the offer and run with it.
  • Make sure you are completely comfortable with a lender before signing any documentation. While they may be offering the best deal, this does not mean that they have your best interests in mind. If you have any doubts, it is a good idea to end the negotiations and look elsewhere as soon as possible. Otherwise, you may end up swindled or with more hidden fees and charges than you had accounted for.
  • Considering using a mortgage broker? While brokers have experience and resources, you cannot rely on the broker to find you the best available deal. It is important that you shop around on your own, and you may even want to use more than one broker. Also, be sure to ask about fees and how payment will be received before getting involved.
  • Mortgages are confusing with all the terms and details, so comparison-shopping can be quite confusing. If not provided with one, be sure to ask for a Good Faith Estimate (GFE) report, which outlines all of the costs, and fees that are involved, in a straightforward and simplified format. This will make it easier for you to make a comparison across mortgage packages.

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