Buying a new home costs a lot of money, however some of that outrageous expense can be reduced if you research and do your homework.
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.
Check your credit report before you apply. This is also common sense. The credit report will inform you on how good your credit score is and if there are any mistakes in the report. Remember, credit reports are the primary way banks can decide if you are responsible and trustworthy or not.
The two most important factors that calculate your credit score is your current credit card balance and if the payments are made on time.
Shop around and get more than one home loan quote. Lending is a competitive business. Let home loan providers know you are talking to the competition. Ask them what they can do to help you. See if they are advertising any home loan rate specials. If they aren’t and a competitor is, see if they will match the competitor’s offer. It never hurts to ask. The internet makes doing research and comparison shopping for the best home loan rates easy. Just a few clicks and you have the information you need right in front of you.
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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