4 Simple Ways to Reduce Mortgage Costs

shutterstock_133821167Are you looking for ways to keep your mortgage rates and fees minimized? If so, you will be happy to know that there are several steps that you can take to help drive down the costs associated with obtaining a home loan. Here is a look at just a few of your options.

Get Your Loan Finalized Within the Lock-In Period

When you apply for a loan, you will be locked-in to the current interest rate for 30 days. Within these 30 days, you will need to provide the lender with all of the requested information, such as documentation regarding your income for the past two years. If you fail to provide the required information within this time frame, you will no longer be locked in to the current rate. If interest rates have increased since you first applied for the loan, it could significantly increase the amount that you pay over the lifetime of the loan. Therefore, in order to keep your costs down, be sure to provide your lender with the required information within the 30 day lock-in period. While you may have the option to pay a fee in order to extend the lock-in period, this is still money that could be saved if you come prepared.

Increase Your Credit Score

In order to keep your mortgage costs down, it is in your best interest to increase your credit score before you apply for a home loan. Generally speaking, a credit score of 740 or more will help you qualify for better interest rates. To improve your credit score, be sure you are paying your bills on time, reduce the amount of debt that you are carrying, and refrain from opening any new credit cards or other accounts.

Save for a Large Down Payment

Buyers who are prepared to make a down payment of 30 percent of the price of the property are more likely to obtain lower interest rates and to encounter fewer fees.

Borrow the Right Amount

Generally speaking, loans that fall between $170,000 and $417,000 are more likely to receive lower interest rates. Obviously, you shouldn’t purchase a home that is more expensive than what you need in order to fall within this range. You should, however, consider these figures when determining how much to save toward a home purchase and how much to put toward your down payment.

Unless you purchase your home with cash, there is no way for you to avoid certain fees and costs associated with taking out a home loan. By keeping these things in mind, however, you can help reduce the total amount that you pay toward your loan.

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