It's Never Too Late to Get a Better Rate on Your Mortgage

Summary: Perhaps you are a first time homebuyer, or maybe you have been in your current mortgage for years; whatever the case may be you should realize that it is never too late to get a better rate on your mortgage. Many people believe that mortgage interest rates are set in stone once they sign the papers - yet, today, hundreds of thousands of people negotiate better rates each year.

Perhaps you are a first time homebuyer, or maybe you have been in your current mortgage for years; whatever the case may be you should realize that it is never too late to get a better rate on your mortgage. Many people believe that mortgage interest rates are set in stone once they sign the papers - yet, today, hundreds of thousands of people negotiate better rates each year. The smart homeowner knows that by paying attention to the marketplace and their credit profile they can potentially save thousands over the life of their mortgage. Most people tend to think of the purchase price of their home as the magic number which they are paying on every month. They think to themselves that they paid $150,000 for their house without realizing that over a 30-year note they have actually ended up paying well over $400,000! As anyone who has been involved with mortgages for any amount of time will tell you - it's all about the interest! Interest rates will eat up the majority of your monthly payment for many of the early years. It is not unheard of for you to only be paying a few dollars against your principal (the actual loan amount) while the other 99% of the monthly payment is going towards interest. Yes, you are basically paying for someone else to make money off of your money. The interest rate you pay for your mortgage not only determines your minimum monthly payment over the life of the loan, but it also determines how much money you will pay towards interest over the life of the loan. Of course, the mortgage companies want to make as much of a profit as they can - after all, they are taking on a 30 year risk in some cases. So what is the smart home buyer to do? There are actually several ways you can get a better rate on your mortgage. Whether you are just buying your house, or have been paying for years, here are some tips to help you nip the interest rate on your loan in the bud: " Shop around. Never go to only one mortgage provider when buying a new home or looking to refinance. Shop around with at least 3 mortgage companies and make sure they know that you are looking elsewhere. If they know you are looking at other mortgage providers, they know you are serious about getting the best deal possible and will be competitive in their offer. " As your credit profile changes, make sure your mortgage changes with it. Ten years ago you may have been a struggling newcomer to the workforce with a lower credit score. Today, you are a highly successful professional. So why pay the same rates you were 10 years ago? As your credit and personal finances rise, consider refinancing to take advantage of lower rates. Even cutting your rate by as little as half a point can save you thousands of dollars over the life of the loan. " Pay a few points up front, get a better rate. Often times you can purchase points up front to help reduce the rate. If you plan to stay in your house for years to come this often makes sense as the price you pay upfront is more than offset by the interest savings over the life of the mortgage. " When interest rates fall, fall with them! During times when the prime rate set by the Federal Reserve goes down, interest rates tend to follow (though not as much). If you bought your house during a period of high rates you may find that current conditions allow you to refinance to take advantage of a full percentage point or more in rate reductions.