Buying a home is a giant decision, any way you slice it. There are so many choices of where to live, what to buy, and anything in between. Not only that, but buying a house is arguably the most expensive thing you will ever purchase.
They can often cost hundreds of thousands of dollars, and you are normally tied to that house for decades in the form of a mortgage. However, there are some things you can do to lessen the overall financial burden of buying a new home. This blog post will take a closer look at a couple of those tips.
Improve Your Credit Score In Advance
In a sense, the higher your credit score is, the lower your interest rate will be and the cheaper your mortgage and home will be. Therefore, you want your credit to be as high as possible before you apply for any loan, especially a mortgage.
Credit scores in the USA range from 300 to 850, with anything over 700 being generally classified as good. Improving your credit score can be done by by doing things like paying off your credit card on time, paying off any active credit card debt you might have, and not over-using your card every month.
Cut out the Private Mortgage Insurance
If you have a down payment of less than 20% of the mortgage, there is a good chance you will have to get some private mortgage insurance. This is insurance on the the loan itself, to protect the lender if you defaut.
If you go with a government loan, you will be forced to pay mortgage insurance no matter what, but if you go with conventional loans, and have a down payment of at least 20%, you will be able to avoid them. While the savings might seem small, they will add up to thousands and thousands of dollar by the end of your mortgage.
Make Extra Payments
The quicker you pay off your mortgage, the cheaper it will be. This is because as each month that passes, you will pay more and more interest and/or mortgage insurance. As a result, it is in your best interest to get the mortgage paid off as soon as possible.
Before paying off your mortgage early, ensure you are allowed to and look at the best way to do so. Some mortgages and lenders have rules and limits to how much you can pay in advance. So before making any extra payments, be sure to reach out to your lender and see if it is allowed.
Shop Around For the Home and Mortgage
When you are buying a home, it can be easy to get tunnel vision and simply focus on the end goal of having a home. However, this is not a good idea and will likely end up in you paying more for your home than you needed to.
It is very important to shop around not only for your home, but also for your mortgage. Check your options with various different lenders just like you will check out a number of different homes. The more research you do, the more you will understand what sort of mortgage and/or home will be the best choice for you, financially.
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