How to save money on your mortgage

One of the most disappointing aspects of a mortgage is that you don’t know you’ve been ripped off until your next office party. Your standing there trying not to look bored. Then, the office pest starts to talk about how they acquired their last property. For the first time your ears open up.  After ten minutes your ears are burning.

Late at night, when no one is looking, you review your mortgage papers and realize that you made all those ‘foolish’ mistakes that everyone laughed over as they sipped their drinks and congratulated the office pest for his financial shrewdness.

The average person believes that you need to buy into a real estate scheme and learn how to manipulate the housing market.  I’m here to give you a few tips that can help you buy your next home.

Auction

Most people do not realize that most repossessed homes go to auction.  The general consensus is that only run down and trashed homes end up at auction – not true. Even millionaires go bankrupt.  House auctions are a little tricky. First, you cannot bid on the home and then arrange a mortgage. You must have the capital in place before you start bidding.

Assume The Mortgage

Few people think about assuming a mortgage before they go house hunting. Many people will consider letting people assume an existing mortgage.  There are millions of older mortgages which were arranged when the market was more ‘consumer friendly.’  To do this, you’ll need to ask if the existing mortgage is "assumable" or transferable.  Then find out what the fees are.  You’ll need a personal loan for the difference between the purchase price and the outstanding mortgage.

Seller Financing

Mention money and you can always get more money.  Asking someone if they want to receive payments over 12 years, but they make a third more than they are asking, is enough to save you a boat-load of interest, and make the seller happy too.

The buyer makes the monthly payments to the seller. The advantage is that you can arrange a lower interest rate, especially if the seller had trouble selling, and avoid many of the administrative costs and fees of the traditional mortgages.  If you have enough of a down payment, you may even be able to buy a more expensive home.

Mortgage Term

There is also money to be saved by playing with the mortgage term. Paying the mortgage off five years earlier may save a substantial amount of money.  Shortening the mortgage term can also help you play with the terms of your mortgage, and secure a better deal.

Down Payment

Find out how much money you can save by giving the financial institute a bigger down payment. Not only will you borrow less, but you can tell the bank to play with the points and give you a better deal.  In many cases, waiting a year or two can save you hundreds, even thousands of pounds. It can also substantially reduce the monthly payments on the mortgage.

Mortgage Calculator

Sitting down with a mortgage calculator can make it easy to see the differences in various methods of calculating the mortgage.  If you are only interested in owning a home – at any cost – then skip this step. In fact, skip most of these steps will not work for you.

If you are trying to save money, or invest in a home to build wealth, then a few hours trying different variables can be an eye opening experience. 
Sharing.

One popular method of saving money is through sharing a mortgage and home ownership. This type of investing is fraught with peril, but it can work. If this is the type of venture you are considering, then create a legal binding contract, or even a business, to treat the home like a business investment.

Selling a Home

Few people think about saving money on mortgages when they are selling. However, a little knowledge can save you money on both closing fees.  Some of the options available here will help the seller save money, or profit more.

One thing that you must look into before selling is your capital gains.  This can not only eat up all of your savings, but don’t let the word ‘gains’ trick you. After paying all the fees and expenses associated with moving, you could be left in a negative equity situation.

Call Your Lender

Sometimes it is possible to remortgage a home at a lower interest rate. Remember to ask the lender what the costs of re calculating the mortgage are.  There are factors that people do not consider when calculating a mortgage. Your credit rating will be better now than it was ten years ago. This could be attributed to the fact that you’ve built a good credit rating by paying bills on time, you make more money now, and that you are more stable.  Even saving ₤60 a month can equal thousands of pounds of savings over the life of a mortgage.

Like anything involved with home ownership, a little knowledge can protect your dream from becoming a nightmare.