How to Save on Your Initial Home Investment & Monthly Payments

 Refinance

There are only two major investments to consider when buying a home.  They are the initial investment, which includes the down payment and closing costs, and the monthly payment, which includes principal, interest, taxes and insurance.  Here are some things to consider.

Initial Investment

  1. Choose a low or zero down payment loan.  You don’t necessarily have to put 20 percent or even 10 percent down.  You can pay 5 percent, 3 percent, or even zero down on some loans.
  2. Occasionally lenders will have programs to cover your closing costs. Ask me about them to see if I am currently offering any.
  3. As part of your offer, ask you real estate agent about the seller paying some of your closing costs.
  4. Shop around for your homeowner’s insurance.  A little comparison shopping can save you money.
  5. You may be able to deduct money paid for discount points from your gross income before computing your tax.  See a CPA for more information.

Monthly Payments

  1. Get a loan that doesn’t have monthly mortgage insurance premiums.  You may be able to reduce or eliminate them by paying a little more at closing.  By putting 20 percent or more down, you can eliminate them entirely.  Talk to me about other ways to eliminate monthly mortgage insurance premiums if you have any questions.
  2. Take advantage of rate lock programs that are currently available.  You can generally lock in a low interest rate 30 to 45 days in advance.  Secure an appraisal before you lock in a rate.
  3. Remember that interest payments on a primary residential mortgage are fully deductible.  Your property taxes are also deductible.  Tax rates definitely favor homeowners.  Be sure to declare both your mortgage interest and property taxes when you file your income tax returns.
  4. Consider an adjustable rate mortgage.  Adjustable rate mortgages (or ARMs) can be as much as 3 percent lower than fixed rates.  Only choose this option when you’re in a position to refinance, should the adjustable rate rise sharply.
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