How To Get the Best Deal on Your Home Mortgage or Refinancing by Using the Internet

Shopping for a mortgage or refinancing your current mortgage can seem like quite a bit of work.  We want to show you how you can get the best deal on your mortgage or home refinance by using the tips below.  Your home mortgage offers your one of the best ways to either save a bunch of money or, unfortunately like many people, waste money every month by not getting the right mortgage or by picking a bad mortgage vendor.  There are better things to spend you money on then overpaying a large corporation or a mortgage broker for your loan.  Just by following these simple tips you can save yourself thousands of dollars over the life of your loan:

Below are easy tips you can do to lower your mortgage costs:

• What is your Credit Score?  Check your Credit Score.  Your Credit Score directly impacts how much you will have to pay monthly since Mortgage Companies use this information to try and quantify the risk they are taking by lending you money.  The worse your Credit Score, the higher the risk for them, the more they are going to charge you.  The difference could be as much as $300 a month for a 250K loan.  See our Credit Score page if you need help improving your score or more information about Credit Reports

• How long do you plan on staying in this residence?  Understand exactly what kind of Mortgage you can afford and need.  This is the next most important item many people misunderstand.  The simple question to ask yourself is - how long do you plan on staying in the residence you are buying?  5,7,10 or 50 years?  Whatever the number is, add 2 years for cushion.  Anything over 10 years you should just get a regular 30 year mortgage.

• Interest only or regular mortgage?  For those of you who don't know the difference, Interest only mortgages allow you to only pay back the interest on your mortgage and not the principal.  A regular mortgage includes payments for both the Principal and interest items.  For example after 5 years a person with an interest only mortgage would owe exactly the same amount as when they bought the place, however a person with a regular mortgage would owe substantially less since every month they have been paying back the principle as well as the interest.  What should you do?  This really depends on your own personal taste.  Do you have the discipline to save?  Are you a sales person where your income changes month to month?  If you can find a better way to use the money, then you should look for an interest only mortgage.  However, if you are just going to spend the money and are not disciplined in saving, then a regular mortgage will be better for you.  Note that even though interest only mortgages have much cheaper monthly payments, they will always have higher interest rates than a comparative traditional mortgage since the risk of default is higher.

Now that you know what type of Mortgage you should get, here is how to get the best deal:

Shop, shop, shop around for you mortgage.  We know this is a hassle, but remember you don't do this very often and think about how much money you will save over the years.  We know most people are recommended brokers/bankers from friends/relatives, and you should use them at first. We just think you should keep them VERY honest with their rates/fees since this is where many people are overcharged.  Also, many brokers or your local bank branch may not have exactly the type of loan you are looking for, but they will still try and steer you to another loan they do sell. Don't fall this, remember they are looking to make a lot of money on commissions on you, so they will do almost anything to keep the deal.  That is why you should follow the below tips to get the best deal for you, either using them or if you have to using somebody else:

1. Again, use a broker or banker that a friend or relative recommends - Make sure you feel comfortable with the person.  If you don't have any recommendations that you like, skip to step 2.

2. Compare the rates they give you with www.LowerMyBills.com (4 Free Quotes) for free online.  The rates you get from the local broker or bank should be very close to what you get back from www.LowerMyBills.com.  If they are more, ask them why and tell them to find you a better deal.

3. Decide who to go with based on who is giving you the best deal and who you feel most comfortable with.  Remember, you don't have to go with the lowest rate, but by doing the above steps you will keep everybody honest and guarantee that you will not get a bad deal on your mortgage or refinance. 

Remember, when you refinance you can always walk away at the closing table if a broker is not being honest with you.  However, with a first time home purchase you usually can't do this, so be MUCH more careful in choosing a Broker or Bank when in this situation.