Are you planning to get some makeover done on your mortgage? If yes, all you need to do is get in touch with a good mortgage broker or a local loan officer and finalize a new deal for yourself. However, in order to save money over a short as well as a long term, it is essential to make the new deal even better. After all, in times of recession, every dollar saved can make a big difference. In order to get a profitable deal, you can follow the following cost-cutting strategies:
1) A significant portion of the mortgage payment is spent paying interest. Therefore, if you somehow manage to get a mortgage loan with a lower refinance rate and a short payback term, you can save a considerable amount of money over the long haul. For instance, a 15-year mortgage loan requires you to make large payments each month, but at the same time, it helps you save a large sum for your future as well. To get the best deal, it is therefore wise to compare the refinance rates from at least 4-5 refinance lenders and then make an informed decision. However, never opt for such a loan, if you think you cannot afford to pay the big monthly installments.
2) Lenders usually do not consider borrowers with a bad credit report. So, if you have open credit card accounts that are no longer used, it is in your own favor to close them all. Also, make sure to get it stated in your new credit report that all your accounts were closed on your request and not because of your bad credit history.
3) In addition, you can also consider paying "points", a fee that lowers the interest rate of your mortgage loan to a great extent. This cost-cutting strategy can help you save thousands of dollars in a long run. However, do not opt for this kind of a strategy if you are planning to move after a few years.
4) In order to save more money, you should also abstain from Private Mortgage Insurance, popularly known as PMI. Most lenders usually insist on carrying this insurance if you borrow over 80% of your home's value. These kinds of insurance policies require you to pay hundreds of dollars each year. Therefore, if you really want to save money over a long period, it is wise to put more money down on a home initially and avoid a PMI.
5) Last but not the least, before finalizing any loan, it is essential to refer to the list of standard fees provided by the Department of Housing and Urban Development. This list will help you analyze the fees your lender is asking for on the loan.
Thus, using a few simple tactics, you can save a lot of money for yourself over a long term. If you follow the above strategies sincerely, let me assure you that you will be able to save enough to free yourself from all debts and also have your own house in future.
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