Five Tips to Save Money When Applying for a Mortgage

tips for saving money when applying for a mortgage

A home is likely the most expensive item you’ll ever buy, and if you use a mortgage it’s probably the biggest financing contract you’ll ever sign.

A $400,000 loan at 7%, if kept for 30 years, will cost over $550,000 in interest payments alone, not including the principal you’ll pay back.

So you want to find discounts anywhere you can.

Here are some ways to save money upfront and through the life of the loan when applying for a mortgage.

Avoid Non-Refundable Application Fees

Some lenders charge you an upfront fee to apply, whether or not you end up using them for the mortgage.

Application fees are often non-refundable. Because lenders don’t make money on a loan unless it closes, some try to defray the cost of lending by charging this fee upfront.

The good news is that application fees are totally avoidable. If a lender asks for an application fee upfront, think twice before paying. Ask if it’s refundable. If not, your best bet is to go with another lender.

Many lenders don’t charge an application fee at all, so your risk is lower if your application is denied, you find a better deal elsewhere, or the loan doesn’t close for any reason.

Keep in mind that it is customary for lenders to charge a credit card upfront for the appraisal, which brings up the next money-saving tip.

» Expert Tip:Looking to buy soon? Set yourself up for success by getting preapproved for a mortgage prior to your home search.

Don’t Order the Appraisal Right Away

The appraisal is one of the most expensive items you’ll encounter during the mortgage transaction.

Home Advisor says the typical cost of a home appraisal is around $400, but larger or unique homes could require appraisal fees of more than $1,000.

Imagine paying $400 or more upfront, getting the appraisal, then finding out…

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