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5 Ways to Save on Mortgage that You May Not Know About
Getting your very own home in Alabama can give you a great sense of accomplishment. But purchasing a real estate in cities like Montgomery is not as easy as it seems. You need to come up with hundreds or maybe even thousands of dollars just to get the right loan for your dream house. That’s why you need to be smart enough to know how to apply for a mortgage without spending all your wealth. Here are the top secrets to save money on your mortgage that you might not be aware of.
High Credit Scores is not Needed
Most people think that having a high credit score is needed to get your loan approved. But actually, the minimum credit score required by most lenders is only 680. So even if you don’t reach 700, there’s still a high chance that your mortgage will get approved. Federal Housing Administration mortgage loan can even assist you even if your credit score is at 620. This option is perfect for those people who are still trying to rebuild their credit score. One of the good things about FHA mortgage is that it requires a much lower down payment if compared to conventional mortgages.
The Costs are Less if You Close at the End of the Month
According to studies, closing the loan at the end of the month will reduce the prepaid interest that you have to pay on your first house loan payment. This can definitely save you hundreds of dollars if you’re planning on saving.
So it would definitely be better if you pay your loan earlier than the actual due date. You’ll not get charge of a higher interest if you pay t before the due date.
The Shorter the Loan, the Bigger the Savings
Another way to save some money is to get a shorter loan if possible. Although you may be paying a higher monthly mortgage than longer mortgage terms, getting a shorter one actually has less interest rate. So you will be saving more in the long run. But don’t try to choose a shorter mortgage term if you don’t have the means to pay it on time. Missing your payments may cost you to get the charge of late fees, or worse get your house subjected for foreclosure.
Take Note of Any Extensions that Your Lender Might Offer
You may try to coordinate with your lender if you’re having financial difficulty and can’t afford to pay the loan in a month or two. Almost all lenders in states like Alabama do offer skip payments or extension programs to help borrowers during their financial hardship. This is very important to prevent your account from being subjected to further collection actions.