Lately, money is tighter than ever for a lot of people! High prices of groceries and utilities have definitely put a squeeze on our budgets, and it can be intimidating to consider getting a mortgage or buying a home in this economic climate.
That said, there are ways to find small savings, which add up over time and help make the process easier. Here are some lesser known tips you can try to help you reduce expenses and end up wealthier in the long run!
1 – Choose a bi-weekly payment schedule: When you pay bi-weekly instead of monthly, you will typically end up paying an extra mortgage payment per year, even though your mortgage fees are based on a monthly schedule. The extra payment, penalty free, will save you money in the long run since you are paying off your mortgage faster. However, it won’t feel like a financial burden since it’s almost the same as paying it monthly.
2 – Save a lot with a shorter loan: If at all possible, try to get a mortgage with a shorter term. This can be difficult since you will have a larger payment, but you will save a LOT of interest and will come out wealthier at the end of the term.
3 – Short term fixed rate mortgages: Under the right circumstances, this kind of mortgage can save you money in the long term. This is due to the unique situation with the prime interest rate changes happening recently. See my previous article for more information. (Link)
4 – Check your credit report: You probably already know that your credit report has a massive impact on the cost of your mortgage, which is why it’s important that you keep a close eye on it! Things that might seem small can lower your credit score enough to make a substantial difference on your interest rate. For example, even being an “authorized user” on another’s credit card can lower your credit score. Clean it up and rake in the savings!
Worse, credit score inaccuracies do happen. Sometimes creditors forget to remove you from their records, or the wrong thing gets reported to the credit bureau. The major credit agencies allow you to request a credit report once a year without impacting your credit, and there are also 3rd party agencies that give you easy access to it.
5 – REALLY shop around for a good lender. Honestly, this is where employing a mortgage broker makes all the difference. Mortgage brokers have contacts with dozens of lenders and are able to negotiate rates that others might not have access to. Best of all, they are free!
These tips might amount to a small savings in the short term, but over time the amount you save can be enormous. That money can be reinvested into improving your home or just enjoying your quality of life, and that’s what it’s all about, isn’t it?