Tips In Saving Money On Your Mortgage

Your Mortgage Payments Will Be Your Single Largest Monthly Payment For Most Homeowners: Here Are Tips In Saving Money On Your Mortgage By Gustan Cho Associates Mortgage & Real Estate Information Resource Center

A home purchase is a very happy and exciting time for home buyers that saving money on your mortgage is the last concern buyers may have on their mind. However, you do want to avoid home buyer mistakes and avoid future regrets. There are several tips in saving money on your mortgage that by taking these simple advice and pointers in saving money on your money, it may save you tens of thousands of dollars during the term of your mortgage loan.

General Mortgage Process And Saving Money On Your Mortgage

When a home buyer or homeowner needs a mortgage loan, they will contact a loan officer to see if they qualify and if so, what is the maximum amount they qualify for. The last thing on the borrowers mind is saving money on your mortgage. Here are the simple general steps of the mortgage process:

  • Contact loan officer
  • Loan officer will have borrower complete a 4 page mortgage loan application which is commonly referred to as the 1003
  • Loan officer will interview the borrower and go over the 1003 to make sure that income, credit, asset, and debt information listed on the 1003 is accurate
  • Loan officer will run a tri-merger credit report
  • Loan officer will review docs such as two years tax returns, two years W2s, 30 days paycheck stubs, and verified funds
  • Loan officer will cross check information from the 1003 and credit report and run file through the Automated Underwriting System for automated approval
  • Pre-approval will be issued on the maximum loan amount that the borrower will qualify for
  • Borrower will go and shop for home and get executed real estate purchase contract and submit to loan officer
  • Loan officer will complete mortgage package and submit for mortgage processing

How Much House Can I Afford Versus How Much Can I Qualify For

Most mortgage loan officers will only get a borrower on the maximum loan amount a borrower can qualify for and NOT how much house can the borrower afford . Borrowers do not think that just because a loan officer will issue a pre-approval letter for a certain amount, that monthly housing payment may be too much for you and your lifetime and it may be too much house you can afford. Here is how loan officers qualify you:

  • There are income and debts that lenders require and here is how debt to income ratios are qualified on borrowers
  • Lenders will take the sum of the total of all minimum monthly payments such as minimum credit card payments, car payments, student loan payments, installment loan payments, child support payments, co-signed loan payments, PLUS your proposed P.I.T.I. ( which is the principal, interest, taxes, and insurance payments of your new home mortgage) and divide it by your monthly gross income and that percentage yields your debt to income ratio
  • Your loan officer will not take into consideration your monthly grocery bills, your child care bills, you private tuition bills, your medical/health insurance bills, your utilities, extra curricular activities, or any other bills that do not report on your credit report
  • Just because you may qualify for a home loan payment by a lender does not mean that you can afford that mortgage loan payment and housing expenses. You, as the borrower always need to ask the question, How Much House Can I Afford?

The Right Time To Think About Saving Money On Your Mortgage

When is the right time to think about saving money on your mortgage? The answer to when is the right time to think about saving money on your mortgage is the earlier the better. All home buyers should set the priority in saving money on your mortgage prior to entering into a real estate purchase contract. The sooner you think about saving money on your mortgage, the better prepared you will be and make the home buying process and mortgage process less stressful. Just because you have great income and high credit scores, that does not mean that you do not have to think about saving money on your mortgage. Having the lowest interest rates possible on your mortgage loan is the number one way in saving money on your mortgage. In order to have the lowest interest rates possible on your home loan is to have the highest possible credit scores. Here is how lenders determine mortgage rates:

  • Mortgage lenders will classify a borrower with higher credit scores as being a lower risk borrower and will offer a lower mortgage interest rate than borrowers with lower credit scores
  • Higher credit scores, yield lower mortgage rates. Lower credit scores means higher risk and higher mortgage rates

Strategies On Saving Money On Your Mortgage

Applying for a mortgage and mortgage process is a process and borrowers should think about not just preparing in getting qualified for a mortgage but also saving money on your mortgage. It does take time to be able to qualify for a home loan if you do not meet the minimum qualification requirements now so it is wise to consult with a mortgage loan officer way ahead of you planning on officially applying for a mortgage loan. Here are some strategies on preparing for a mortgage and saving money on your mortgage:

  • Make a habit of making sure that you always make your minimum monthly payments on time such as minimum credit card payments, installment loans, car monthly payments, student loans, and any monthly minimum payments that report on your credit report
  • One 30 day late payment can plummet your credit scores by 60 or more FICO Points and derogatories on your credit report will remain on your credit report for at least 7 years from the date of last activity, DLA
  • Late payments in the past 12 months is often a deal killer because most mortgage lenders will not approve a home loan with late payments in the past 12 months
  • Late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale is normally a deal killer. Please contact me at 262-716-8151 or email me if you had late payments after bankruptcy and foreclosure where I or a member of The Gustan Cho Team at Platinum Home Mortgage Corporation may be able to help you
  • Having low credit card balances will optimize your credit scores. Maxed out credit cards will plummet your credit scores
  • Never close out an active credit card revolving account. Having open credit tradelines is a must for a healthier credit score. Also, most mortgage lenders will require minimum credit tradelines requirements

Let’s say that a seller want a bottom line price of $100,000 on the sale of their home. FHA will allow up to a 6% sellers concession. The seller of this home can inflate the purchase price by 6% of the $100,000 purchase price, or $106,000, and give the home buyer $6,000 as a sellers concession to the home buyer to be only used for closing costs. You can use sellers concessions for closing costs only and not the 3.5% down payment required on a home purchase. Examples of closing costs are one year’s homeowners insurance premium that the home buyer needs to purchase and be paid at closing, title charges, recording fees, tax stamps, attorneys fees, appraisal fees, escrows ( 2 months property taxes and 2 months homeowners insurance ), and points to buy down the mortgage rates. The seller cannot give a kickback to the home buyer any overages of sellers concessions. Any seller concession overage needs to go back to the sellers. However, most loan officers will use any seller concession overage in buying discount points to buy down the mortgage rates. Borrowers should think about buying down the mortgage rates with the sellers concession credit they get from the home seller. A lower mortgage rate can be thousands of dollars of savings over the course of the mortgage loan term.

If you are planning on getting ready for a mortgage and need a loan officer for some tips and advice on saving money for your mortgage, please contact me at 262-716-8151 or email me at gcho@gustancho.com. I am available 7 days a week, evenings, weekends, and holidays. The Gustan Cho Team at CrossCountry Mortgage issues pre-approvals 7 days a week. CrossCountry Mortgage NMLS 3029 is licensed in 50 states and has a five star national reputation for closing loans in 21 days or less and not having any overlays on its government and Conventional Loan Programs.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.