A good deal on a home loan can mean the difference of tens of thousands of dollars over the next few decades. Find out what makes a good deal when it comes to your mortgage. A lot depends on your short and long term goals.
Short Term
Maybe getting the deal closed and moved in is your top priority. You can look into programs to lower your down payment, and try to get the lender or seller to cover some of the closing costs. Saving money may be important to you, but don’t bargain for too many benefits now that can hurt you later on.
Long Term
Getting a lower down payment is nice, but it increases the total amount of your loan, and that means more interest long term. It also means you may have to pay private mortgage insurance (PMI) until you build up some equity.
You can also buy discount points to lower your interest rate, but if you already know you plan to refinance or sell it in a few years, the extra cost now won’t help you in the long run. You won’t be able to earn back what you spent.
If you plan to stay in your home until it is paid off, however, putting down a bigger down payment, opting for a shorter loan term, or buying discount points can really pay off. Long term, the money you’ll save in interest alone could go into a kid’s college fund or buy a really nice car.
Getting the Best Deal
Look at every angle of your home loan and run your numbers for a few different options before signing on the dotted line. Getting preapproved can help you figure out how much house you can afford, Buying a little under that threshold gives you more money to help minimize the impact of fees, costs, insurance, and interest.
The most important thing is to work with a competitive mortgage company. Going with your local banker may seem safe and comfortable, but it’s unlikely they have access to the best loan programs or the best interest rates. Shop your loan around just like you would for a bid on a new roof or pricing for a new car. You’ll; be glad you did.
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