Easy Ways to Save Money on your Mortgage

Posted: October 9, 2009    Categories: mortgage advice

Your home is likely the single largest purchase you will ever make. Sounds a bit scary, doesn’t it? It doesn’t have to be!

The process of purchasing a home, however, should not be taken lightly, as the type of financing you will secure for your home purchase will dictate your monthly budget for years to come.

With that said, it is important to understand that finding a good mortgage rate may just be the beginning. There are many strategies that you can employ to secure the best, possible mortgage for your home.

Below are several key strategies for your consideration:

1. Just like anything else, mortgage rates can be negotiated. It is not out of the question to ask for a reduction in a published mortgage rate, even if it is just a quarter of a point.

Remember that mortgage lenders are just like any other business, and they are out there, competing for your business. In other words, don’t just choose a mortgage lender without thoroughly examining other lenders and their rates in your area before committing to a particular lender. Check out the published rates and take the time to learn about all of the loan programs available so that you can find the one that best meets your needs and your budget.

1. Consider the advantages of a seller concession. A seller concession essentially involves asking the seller for a percentage of the home in a concession (which is usually no more than six percent). For example, if you purchase a home for $200,000 and ask for a seller concession of five percent, the price of the home will become $210,000, but the seller will return that $10,000 seller commission to you at closing, thereby enabling you to use the funds toward your closing costs.

In other words, you are effectively rolling the closing costs of your mortgage back into the loan, thereby providing yourself with additional cash funds for closing expenses.

Another bonus to a seller concession is that, because mortgage interest is tax deductible, you can write off the costs associated with closing. Although you will end up paying a slightly higher mortgage payment, many buyers find the relief of not having to come up with the cash at closing to be a good trade-off.

However, it is important to note that the only way you can swing a seller concession is if the house is appraised for at least the amount being taken out for your mortgage.

1. Assume the seller’s mortgage. You may be able to save money by simply assuming the existing mortgage on the home that you’re buying, assuming that the mortgage is at a lower interest rate than current interest rates. You may be able to save some costs this way, particularly in administrative costs, although you will need to provide enough cash to cover the difference between the purchase price of the home and outstanding mortgage.
2. Pay down the principal on the home, when you are able. There is simply no better way to pay down your mortgage balance and the interest that goes along with it than to pay extra payments on your loan every year. Even one extra payment each year will allow you to pay off your mortgage years before you would have otherwise.

About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!

The Purcell Mortgage Team are experts on Calgary mortgages!