Five Ideas for Getting a Better Deal on Your Mortgage
Friday, February 7, 2014, 1:00 AM | Leave Comment
Many people want their mortgages to be as low as possible. This article contains five great ways that a person can use to get a better deal on his or her mortgage.
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Improve Your Credit
When a bank gives out a mortgage, it is taking a risk. In order to minimize that risk, a bank will only give mortgages to those with adequate credit scores or higher. One way to get your credit score higher is to pay off all of your debts. A second way is to ensure that any issues that might be black marks on your credit record are resolved with the creditors.
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Pay as Much as Possible Upfront
Private mortgage insurance, or PMI, is a type of insurance that will allow the person who is lending the money to be protected against losing money should the person who is being lent to defaults on his or her loan. This type of insurance is necessary if the down payment for the loan is less than twenty percent of how much money the house is worth.
In order to avoid having to pay these insurance premiums, a person who is seeking a mortgage can pay more than twenty percent of the value of the house upfront. If a person is absolutely unable to do so, then he or she can keep track of when more than 80% of the mortgage has been paid off and stop paying the premiums at that point.
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Find a Builder with Construction Insurance
When seeking a loan for a new building to be created, it is important to hire home builders with construction insurance. Because the insurance lessens the risk that the additional costs that aren’t able to be paid will arise, a bank will be much more likely to grant a mortgage to those who have hired a construction company that has insurance.
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Lock in a Rate
As a new building is constructed, it is important to lock down the lowest interest rate possible. This is because, if an interest rate is not locked down, it has the potential to go up and cost the customer a great deal of money.
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Look at Discount Points
Discount points, or pre-paid interest points might be available for purchase. Every point that is purchased tends to reduce the amount of interest on a mortgage by an eighth of a percent, which will save the customer a great deal of money in the long run.
Following this advice will make it more likely that a person is going to get a great deal on his or her mortgage. It will ensure that he or she is perceived as a low risk loan to creditors, as well as allows him or her to navigate the world of mortgages with more savvy than he or she would have been previously able to.
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