Saving Money on a Mortgage
by Ellise Walsh

A home is the most important and most expensive single purchase most people will make in their lifetimes. A home, and the mortgage loan that goes with it, are vital parts of your financial life. A good deal on a mortgage loan can strengthen your financial position and allow you to build an asset base for the future. A bad mortgage loan deal can lead to financial difficulty and even put your home at risk.

When shopping for any mortgage loan, it is vital to shop around. Chances are you did a lot of shopping around the last time you needed to buy a new car, so it just makes sense to shop around when buying something than costs ten times as much or even more. Once you have started shopping for a mortgage and comparing the offers you receive, you may be surprised at the difference in the interest rates, terms and closing costs. Interest rates can vary widely, even on similar mortgage products. If you don’t shop around for a mortgage loan you could be throwing money away.

It is also important to have an advance look at your credit report and credit score before shopping for a mortgage. It is unfortunately not all that uncommon for credit reports to contain errors and unwarranted negative information. Creditors, including mortgage lenders look very carefully at a potential borrowers credit report and credit score. A negative event in your credit history could cause you to be charged a higher than necessary interest rate, or even to be turned down for the loan altogether. By pulling a copy of your own credit report and examining it before your bank does, you can eliminate any erroneous items and make sure you get the best interest rate possible.

A half a percentage point difference may not seem like a big deal, but even a small difference in the interest rate can have a big impact on your monthly mortgage payment. A small difference in the interest rate will also mean a savings of thousands of dollars in interest over the life of the mortgage loan.

Another way to save money on a mortgage is to take out a 15 year mortgage loan instead of a 30 year. Many people erroneously think that the payments on a 15 year loan are double those on a 30 year mortgage, but that is not the case. Due to the affect of compound interest, the payments on a 15 year mortgage are generally only about 30% higher than those on a 30 year mortgage loan. Be sure to at least consider this option as you shop for a mortgage.

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