6 Ways to Save on a Mortgage This Year

6 Ways to Save on a Mortgage This Year
  • Opening Intro -

    Mortgage rates are on the rise, moving away from the historic low rates consumers enjoyed in 2010.


Unfortunately, there weren’t that many people feeling secure enough to buy a home or to take advantage of those low rates as there were in the early years of the decade, but if you were among the few who were able to do either – congratulations!

Likely, this time next year the housing market will look different, with fewer foreclosures in the pipeline and housing prices stabilizing across the nation. For 2011, the recovery is likely to continue, bringing with it additional opportunities for people to enjoy a buyer’s market and low interest rate home loans.

If you’re shopping for a home loan, the following six tips can help you save money on your mortgage:

1. Shop early – Rates will rise throughout the year or at least that is the group analysis of prognosticators and pundits who are forecasting such trends. If possible, shop for a loan now even if you’re not planning to begin looking for homes in the spring. You may be able to lock in a lower rate now and still have that rate 60- to 90-days out when you’re ready to buy a home. Ask your lender about their rate-lock options.

2. Shop around – Commercial banks, community banks, credit unions and mortgage companies are among the many retailers of home mortgages. Lenders give you the money directly, while brokers work with lenders – look at both options when shopping for a loan.

3. ARM up – Adjustable rate mortgages also known as variable rate mortgages received bad press a few years ago when weak lenders pushed these loans and cash-limited consumers snapped them up. Later, when rates, readjusted upward millions of consumers found that they could not pay the higher rate. Well, ARMs are still a good idea if you have very good credit and can refinance later or are planning to sell your home within five years. Large down payments help too – consider these options to help keep your overall housing costs contained.[1]

4. Know your fees – Closing costs can add thousands of dollars to the cost of buying a home. Some lenders will waive or absorb at least a portion of these costs, others may roll them into your loan. Be prepared to calculate the difference between loans including rates, closing costs and other fees.

5. Read the fine print – Your loan may seem like the best deal, but familiarize yourself with the fine print, making sure that there are no prepayment penalties. In some states prepayment penalties are illegal, but not in all. These payments can be as much as six months interest according to ING Direct.[2]

6. Know your credit – The higher your credit score, the better position you are in when it comes to being approved for a mortgage and at a favorable rate. Obtain free copies of your three credit reports and your credit scores, correcting mistakes if they are found.[3] Even if your credit is not the best, you may still be able to secure a mortgage provided you put more money down and accept the terms. Your financial struggles of 2007 and 2008 are in the past and your future is brighter if you have a good job and are paid up on your bills.

Preparation is the key to finding the right home loan or mortgage for you in 2011. Be as thorough in your research for a home loan as you are in your research for a new home.


[1] SayLending.com: Adjustable Rate Mortgage Loans (ARMs)

[2] ING Direct: Mortgage Shopping List

[3] AnnualCreditReport.com: Free Credit Reports


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Categories: Home Financing

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".