Mortgage Finance-tips To Save You Serious Money

For almost every American who is considering being a homeowner the purchase of the home with a mortgage is the single biggest purchase of their lives. With home prices averaging close to $230,000 in 2006, depending on the rate and the terms of the loan you can expect to pay $250,000 or so in interest over the life of the loan-that is close to $500,000-NOW do I have your attention?

The very first thing for you to remember when you are buying your home and buying your mortgage- is just that- you are the buyer. Someone else is selling you something-the house, the loan, etc. So in a sense it is no different from buying a car or any other big purchase. You wouldn’t buy a car without doing some homework would you?
To review from part one:

1. NEGOTIATE the closing costs.

2. NEVER give a payment you can "live with" to your salesman.

3. SHOP for a mortgage broker/mortgage banker.

4. KNOW your FICO score. It is simple-the lower your score the higher your interest rate and the worse your terms will be. If you are in the driver's seat with a high score you can save some serious money and get better terms. Start with getting a copy of your credit report and do immediate repair work if necessary. It will be worth thousands of dollars to you

5. PAR. When you finally find someone you want to do business with ask for the par rate. That is the lowest rate for that day. It is not uncommon for lenders to start you off with a rate that is 2-3 points higher than what you might otherwise qualify. That is profit to them. On a $200,000 loan 2.5 points is $5,000. For e-lenders salesmen get a bonus of one point for every .25 points they can get above the par rate.

6. NEVER get a mortgage thru a bank. Here's why. A third party mortgage broker is required by law to disclose all fees and markups they are charging you. Banks do not have the same requirement. Thus you will never know how much they are overcharging you.

With the growth of the mortgage industry, it follows that the numbers of people functioning as mortgage brokers grow as well, especially online brokers. According to the National Association Mortgage Brokers nearly 2/3 of all borrowers use a mortgage broker. There is a lot of money at stake here. When applying for your mortgage, it pays to follow these steps to save some serious money.