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.
Only apply for a home loan if you have a high credit score. Higher credit scores equate to lower interest rates, thus saving the home owner thousands of dollars over the term of the loan.
The lender will analyze and study every single credit report that exists under your name, so make sure they are all rock solid. Obtain a free credit report. Does it have mistakes? Make sure the mistakes are credited before submitted to the lender.
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 collect more than one home loan quote. Lending is a competitive business, so consequentially lenders compete for your money. They are always willing to lower their quote if a competitor is bidding for your service. Use this benefit to your advantage.
Another way you can save money on your loan is by requesting the seller cover the closing costs. Closing costs range between 3-7% of the total cost of the property. You cannot hurt your standing by doing this. The worst thing that can happen is a polite ‘no’ by the seller.
If the seller will not cover the closing costs, inform the bank and discuss lowering the closing rate. The bank will likely work with you, so do not be afraid to ask.
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!
Tom Martens is the content coordinator for South Arica?s leading Homeloans portal which amongst others offers Bond origination services for all major banks.