Saturday, September 22, 2007

Tips on First Mortgage Loans

First Mortgage Loans (The Federal Reserve Board publishes a Home Mortgage Guide with valuable information on the subject.)
  • Although your monthly payment may be higher, you can save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford. On a $100,000 fixed-rate loan at 8% annual percentage rate (APR), for example, you will pay $90,000 less in interest on a l 5-year mortgage than on a 30-year mortgage.
  • You can save thousands of dollars in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15-year, $100,000 fixed-rate mortgage, just lowering the APR from 8.5% to 8.0% can save you more than $5,000 in interest charges. On this mortgage, paying two points instead of three would save you an additional $1,000.
  • If your local newspaper does not periodically run mortgage rate surveys, call at least six lenders for information about their rates (APRs), points, and fees. Then ask an accountant to compute precisely how much each mortgage option will cost and its tax implications.
  • Be aware that the interest rate on most adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month.
  • To maximize the use of every penny to your mortgage, and in virtually every case pay off years earlier, look into a 'Money Merge Account', which uses special software and support to give homeowners the greatest savings available. This unique system gives you increased financial security with flexibility.
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