Mortgage Rates May Rise—But You Can Still Save!

By
Real Estate Agent with RE/MAX Executive

Mortgage rates may rise or fall this spring (lately they seem to be falling!)—but that needn’t prevent you from saving even more money when it’s time to structure your own local mortgage. The underpublicized fact is that mortgage rates are only one of the factors that affect how much you wind up paying. No matter what happens to mortgage rates in 2014, here are some keys to making mortgage decisions that result in significant savings:

Tailor the term

Evaluate your budget and see whether it is possible to increase the amount of your monthly payment. By increasing monthly repayments, you reduce the term of your mortgage. Over the course of the loan, this can save tens of thousands of dollars.

Refinance for five years instead of two

The interest you pay on a refi loan isn’t the only cost. The origination and other fees can easily end up costing four figures. It’s a numbers game: simply calculate the anticipated savings from refinancing, then subtract the amount of the fees. The difference tells you your net savings…and demonstrates why one of the easiest ways to grow those savings is to refinance less frequently.

Change to biweekly

Changing to biweekly payments instead of monthly payment can save you more than small change. The reason is on the calendar: there are 52 weeks in a year, but only 12 months. If you make 26 1/2 payments every year, that equates to 13 monthly payments. It’s a stealthy way to make an additional month’s payment every year without really noticing it. When choosing a loan, opt for one where the bank allows you to choose biweekly payments (as long as they don’t want to charge an additional fee). Also request that the extra payments be deducted from the principle.

Improve your credit score

On this count, every mortgage guru sounds like a broken record. Although the average quoted mortgage rate may rise or fall, that’s not necessarily the rate that you pay. Your FICO score is the primary determinant of your mortgage rate. The difference between a good FICO score and a bad one can be significant, so get a copy of your credit card record and challenge any damaging inaccuracies. Lenders want to see a long history of paying on time with a mixed use of credit. Mortgage rates will almost certainly increase in the future because they’re still well under historical averages. But there are plenty of steps you can take to cut thousands of dollars from your ultimate mortgage costs. And if you are ready to buy a house this spring, contact me today—I’m ready to show you what’s coming up at your price point!

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Topic:
Home Buying
Location:
Massachusetts Middlesex County Hopkinton
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Tags:
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Rainmaker
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Kate McQueen
CB&A Realtors - Cypress, TX
Tailored service for your real estate needs!

Mortgage rates are always an important consideration!  Some expect rates to remain low until the US economy shows signs of "full employment."  Since we can't accurately determine when that might happen, we should take advantage of the lower rates while we can.

Apr 28, 2014 12:21 AM #1
Rainmaker
221,215
John Savignano
RE/MAX Executive - Hopkinton, MA
Realtor - Hopkinton and Metrowest MA Real Estate

Hi Kate, I agree , rates have been threatening to go up for quite a while now and have slowly been creeping up. still historically low and a good time to take advantage

 

John

Apr 28, 2014 12:34 AM #2
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Rainmaker
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John Savignano

Realtor - Hopkinton and Metrowest MA Real Estate
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