The following are mortgage tips that will potentially save you tens of thousands of dollars in interest payments on your mortgage and shave years off your original amortization period.

1. If the payments are about the same, it would be a wiser financial decision to make payments on aAlabama mortgaged home rather than paying rent on a house or apartment.

2. Paying down your mortgage is the best thing a property owner can do. For instance, at the beginning of the amortization period it’s not uncommon to pay $1500 in interest on $2000 mortgage with only $500 going towards the principal. By just increasing the payment by $500 dollars per month you can double the amount paid down on your mortgage. You pay more now to save much more later.

3. The worst thing that a borrower can do is to stop making payments on a mortgage.

The property will eventually end up in foreclosure if the borrower does not cover arrears, legal fees, interest etc.

4. The size of mortgage that you qualify for will be mostly determined by the level of your debt at the time of your mortgage application. Generally, this number would be around 40% plus or minus several percentage points.

5. When renewing your loan or selling your house, look for options and features that afford you with the maximum amount of flexibility.

6. The faster you pay down your mortgage, the sooner you will be able to allocate your funds towards various investments.

7. Look for a mortgage that offers the best prepayment options.

8. Increasing the frequency of mortgage payments will reduce overall interest costs. For instance, bi-weekly mortgage payment is much better than a monthly mortgage payment. It saves you much more money in interest costs and you paid down more principle.

9. When you are purchasing a home, always remember that the listing price is negotiable and that you can make a counter offer.

10. Remember that flexibility allows a homeowner to increase their cash flow and pay down the principal faster. The flexibility is negotiated before you sign on the dotted line, not after.

11. Shop around for the lowest possible interest rate when purchasing a mortgage or any other loan.

12. Beware of the mortgage pre-approval trap as it might have you paying too much for your dream home. Just because you can borrow a large sum of money doesn’t mean that you should necessarily spend that much. Look at it this way. If you spend less on your home you will have the option of using the increased monthly cash flow towards prepaying your mortgage principal. This way you will save tens of thousands of dollars in interest costs and you will greatly reduce your original mortgage amortization period.

13. Remember that if you are changing mortgage lenders, the same qualifying factors may apply. You may be facing both legal and appraisal fees so investigate all associated costs before you act.

14. Shop around for the best deal on a mortgage before getting the pre-approval in writing. You can reduce the amount of interest paid over the life of your mortgage by opting for a shorter amortization period. Only a 1% difference in mortgage rates can mean thousands saved or spent in interest payments.

15. If you are guaranteed an appreciation rate that is a few points above inflation and the monthly costs of renting are the same as buying, it is a good time to purchase a home.

mortgage tips

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