- 1). Improve your credit score. Kelly B. Grant, analyst at SmartMoney.com, advises that those "who have a top score (760 to 850), can get a rate of 5.96% on a 30-year, fixed-rate mortgage these days. . .A score just a few points lower (759 to 700) will net you a higher rate of 6.18%. For a $250,000 loan, that's a difference of $12,772 in interest over the life of the loan."
Pay your bills on time and work to pay off any credit card or other loan debt you have. It may take time, but the decreased stress of a high mortgage cost later on is worth the extra wait. - 2). Put down as much of a down payment as possible. Twenty percent is ideal, as you will be able to avoid having to pay for private mortgage insurance, which protects your lender in case you default on your loan. The more you can reduce costs up front, the less you will have to pay in the long run. Save as much as you can in order to save money on interest as you will effectively be reducing the amount of the mortgage by putting more down in the beginning.
- 3). Know which type of loan is best for you. Research which kinds of loans fit your particular money and life situation. Carefully examine them for fees and other costs, and consider how much the whole loan will cost in the end, especially with adjustable rate mortgages.
- 4). Pay more than the minimum amount on your mortgage each month. Consider making payments every two weeks. Pay exactly half of your monthly mortgage every two weeks. There are 26 two-week periods in the year, and you will end up paying 13 monthly payments this way. Make sure that your lender does not multiply your monthly payment by twelve and then multiply it by 26. This does not enable you to pay more and significantly reduce the amount of your loan.
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