How To Save On Your Home Loan Costs

By Graham McKenzie

Buying a home is making a major investment, and it's an investment that can cost a buyer a lot of money unless they do their homework. You can save money on your home loan costs by taking a few steps, regardless of how the economy is doing when you decide to shop for a home loan.

When you apply for a home loan, make sure you have a high credit score. This is common sense in the world of home loans. Poor credit equals either a rejection of the loan or a very high interest rate.

Check your credit report before you apply, and make sure you pull reports from all credit bureaus because your home loan provider uses all credit reports in determining the buyer's creditworthiness and ability to repay the home loan. If your reports have mistakes, get the mistakes corrected.

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 gather more than one insurance quote. This may sound like a nuisance, but it really helps you save money in the long run. Lending is a competitive business, which means lenders will compete against each other for your service. Competition equals lower rates for you, the home owner.

Ask the seller to pay your closing costs. These are costs that are paid when you obtain your home loan. They are between three and seven percent of the home's total cost and include points, taxes, title insurance, financing and other settlement costs. Many sellers are willing to pay these costs for buyers. This can save you a lot of money. If the seller doesn't offer to pay the closing costs, then simply ask. The worst that will happen is the seller will say no. You have nothing to lose by asking.

If the seller refuses to cover the closing costs, consult the lender and request a negotiation of a lower rate on the closing 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! - 31382

About the Author:

Sign Up for our Free Newsletter

Enter email address here