Skip to content

Tips To Help You Save Interest On Your Home Loan

June 2, 2012

Buying a home usually means applying for a home loan. This means that a lender forwards the entire purchase price for the purchase of the home and the borrower undertakes to pay regular amortizations consisting of principal and interest for a specific period of time. This article will provide information on how to save yourself from paying hefty interest rates.

Why Save up on Interest?

Home loan interest rates usually range a few decimals or points from each other. For example, let us say a good interest rate, is 1.75% interest per month and a bad interest rate can be 2.5% interest per month. In the given example the difference is less than 1% therefore at first glance they may seem insignificant but bear in mind that the former amounts to 21% interest per annum while the latter amounts to 30% per annum.

Credit Repair

Simply put, the higher your credit scores and ratings the lower your interest rate and vice versa. One sure way to increase your credit score is to pay for your unpaid and overdue debts, If that is not possible or it is still not enough then you can try disputing false, inaccurate, obsolete information on your report.

Debt Negotiations

Paying debts can be financially burdensome, especially if a significant portion of the same was incurred through interest and penalties. That is why it is important to negotiate for the removal or reduction of the interest and penalties to minimize the total debt paid. Tip, threaten unsecured creditors with a bankruptcy filing to get them to see reason but never do this with secured creditors who have the power to attach your property in satisfaction of a debt.

Debt Consolidation

If the total amount of the debt is too much then you can try taking out another loan to consolidate some or all of your debts. Remember the debt consolidation loan must be realistically payable and the payment plan must be for less interest than what is being charged from your overdue debts. Otherwise you may end up under more debt.

Collateral

Interest is a means to control the risk involved in lending money. As such, if you can lower the risk, or ensure collection then the interest rate should go down accordingly. A sure way to lower that risk is to provide sufficient collateral that if sold can pay for the entire debt.

Down Payment

Another way to lower the risk involved in lending money is to lower the amount owed. This is because a substantial down payment:
1. lowers the total debt owed, making payment more likely
2. lowers the payment period within which interest is earned

Pay On Time and in Full

Interest can be earned in two ways. The first is already a given since it is attached to the principal and is paid regularly. The second is through nonpayment or incomplete payment which allows the interest to be compounded. Therefore the simplest way to save on interest is to pay on time and in full

Fixed Rate

Applying for a fixed rate mortgage means the interest rate payable does not increase from its initial state. This is as opposed to adjustable rates that usually increase in as many installments as possible, after the initial fixed rate expires.

Source:

http://EzineArticles.com/7048837

FOR A FAST PRE-APPROVAL:

http://pmcmortgageloans.com/mortgage_application.php

First, complete a loan application on our website
-Go to http://www.platinummortgagecompany.com
-Click on Apply Now at the top
-Scroll to the middle of the page and Click on 3. Full Application

Advertisements
No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: