When you apply for a home loan, make sure you have a high credit score. This is common sense in the world of home loans. Poor credit equals either a rejection of the loan or a very high interest rate.
Buying a home, of course, is a major investment. In fact, buying a home may end up being the largest investment you will ever make. Saving money on a home loan is highly advisable and is easier than you may think.
When you apply for a home loan, make sure you have a high credit score. Higher credit scores mean lower interest rates on home loans, which will save the buyer thousands in interest over the term of the loan.
Check your credit report before you apply, and make sure you pull reports from all credit bureaus because your home loan provider uses all credit reports in determining the buyer’s creditworthiness and ability to repay the home loan. If your reports have mistakes, get the mistakes corrected.
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 you ask the seller to cover your home loan closing costs and they refuse, then ask the lender to negotiate a lower rate on the closing costs with you. This is also something you should inquire about when shopping for the best home loan rates because closing costs can add a lot of money to your mortgage costs.
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.
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