If you are closing on a house soon you are likely shaking every last penny out of your piggy bank. Here are a couple simple tricks to save some change!
1. Don’t Pay Private Mortgage Insurance! PMI is not an insurance that benefits you, it only benefits the lender if you were to default on payments. You don’t have to pay PMI if you have a 20% down-payment. A down payment of this size can save .5 % – 1% a year! That means saving $83.33/month on a $100,000 house. That is some good savings!
If you know this isn’t an option for you right now, don’t fret! You don’t have to pay this forever. Once you payoff 20% of your house you can call and have them remove that pesky extra expense! Some lenders require a formal appraisal, so check with your lender for the fine print.
2. Negotiate the Origination Fee. This is possible! Get yourself some leverage. If you have two lenders that are offering the same terms, ask them if they would be able to budge on the Origination Fee. And if you are up for it, a proven tactic is to offer to move your banking/checking to their bank in exchange for a smaller origination fee. This could save you .5% of the value of your house. That’s $500 less you would have to bring to closing for a $100k house.
3. Shop for your mortgage! Interest rates aren’t going to fluctuate much from lender to lender, however you could still find some better terms. For example one lender might offer you a 5-year balloon at 4% APR and you were just happy to get a loan. Don’t be satisfied with that! Call other lenders and tell them that you were already approved for a loan at X-bank and ask to see if they can do better. With a 5-year balloon payment you will have to refinance in 5-years. That means paying all those closing costs again, and you never know how high interest rates could go! So this shopping could save you THOUSANDS down the road!