Buying a home is a major financial decision. Chances are that you will be making payments on your mortgage for years or even decades. While you may be focused on finding the right home for your needs in the right location, it's important to pay close attention to your mortgage. Just a slightly lower interest rate or being able to avoid private mortgage insurance can help you save thousands of dollars over the course of your home loan. If you are looking to save on your mortgage, here are three things to consider.
Improve Your Credit Score
When it comes to your mortgage, your credit score has a major impact on your ability to get a loan and also your interest rate. The higher your credit score, the more likely you will be approved by lenders and that you will get a more favorable interest rate. For an FHA loan you will need a credit score of at least 580 while a score of 620 is needed for a VA loan. Conventional loans typically require scores of at least 620. Paying down debt in addition to paying your bills on time can help increase your credit score.
Use a Mortgage Broker
One of the best ways to save on your mortgage is by shopping around. Looking at multiple lenders will ensure that you get the best interest rate and lowest fees possible. However, looking at multiple lenders can be a major hassle. The good news is that mortgage brokers can do the leg work for you. A mortgage broker can help you find the best options for your needs. Mortgage brokers typically charge a fee that is either paid by you or the lender. Mortgage broker fees are typically between 1 and 2 percent of the loan amount.
Save for a Down Payment
If you are looking to save on your mortgage, saving up a higher down payment may help. Coming to the table with a larger down payment may make lenders more likely to approve your application. A larger down payment may also help you qualify for a more favorable mortgage rate as well. There are also other ways that a down payment can help you save. A down payment of at least 20 percent will also allow you to avoid paying private mortgage insurance or PMI. This alone can save you thousands of dollars.
Chances are you will paying your mortgage for years or even decades. Because of this, just a few small changes can mean saving thousands of dollars over the course of your loan. A few things that you can do to save include improving your credit score, using a mortgage broker, and saving up a larger down payment.