Finance information

Tips for the best deals

Prequalify Before You Shop for a Home - Smart buyers make sure to know exactly how much they can afford to borrow before beginning to look at homes. You can bet that the seller's agent will ask if you've been prequalified; if you haven't, they may decide you're not a serious buyer. Having a deal in your pocket is always good ammunition in negotiations. (However, i generally have my buyers "preapprove" before they start looking at homes. This is a much more savvy way - you have it in writing, providing you even more leverage when making offers and during negotiations.)

Lock in a Rate (or not) - In the time it takes you to find a home and close your mortgage, the interest rate on your loan could fluctuate upward. If it looks like rates are heading up, lock it in. If rates appear to be falling, let it float. If your lender agrees to a lock, make sure you get it in writing. )Get the advice of your Realtor or your lender. Their knowledge and experience can really help you in this decision.)

Apply for an FHA - or Veterans Administration-Backed Mortgage VA - The Federal Housing Administration and the Veterans Administration don't actually make loans, but they do guarantee loans offer through traditional lenders. With an FHA loan, you can put down a little as 3 percent, depending on the value of the property. VA loans often require no down at all, but they carry eligibility requirement based on service in the armed forces.

Negotiate The Points - If you're considering a large mortgage, your lender may be willing to lower the points charged to get your business. You lose nothing by negotiating. If you're planning to stay in your home for less than five years, lower your points paid by accepting a higher interest rate. If you're sticking around longer, consider more points against a lower mortgage rate. You pay higher costs up front but can save money in the long run. Just remember there are three components to your mortgage loan: The interest rate, the points and the lender's charges.

Watch Out for Prepayment Penalties - Make sure you won't be penalized for paying off your mortgage ahead of schedule if you choose to do so (When making an additional payment above your regular mortgage payment, always be sure to specify that the additional amount is toward principal!)

Watch Out for Mortgage Protection Insurance - Some lenders may offer you mortgage protection insurance which will make your payments in case you die, become disabled or lose your job. Check around; you often may find the same kinds of protection through your regular insurance agent at a lower cost.

Private Mortgage Insurance (PMI) - Private mortgage insurance is required by the lender on loans with down payments of 5 percent or less. The cost can run from one-third of a percent to 1 percent monthly. Once your equity reaches 20 to 25 percent, you may be able to cancel your insurance. While some look at this required insurance as a nuisance, without it, there wouldn't be loan options with only 3% down or 5% down - all loans would probably require the more restrictive 20% down.

Consider the Benefits of an Early Paydown - There are several benefits to accelerating the payments on your mortgage. Every extra dollar you put into your mortgate can save you up to three dollars down the line in interest savings. You'll build equity in your home more quickly, which puts you in a better position to trade up in a shorter time period. It also forces you to save money you might otherwise spend rather than invest. But make sure you verify with your lender that there won't be a prepayment penalty.

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