Save on Your Mortgage - Shop First

by Sally Hechter 04/21/2021

Photo by Nattanan Kanchanaprat via Pixabay

Of course, you want to stay within your budget when buying a house. You certainly want value for your dollar. But a buyer should never lose sight of the fact what they truly desire is getting the home they want and that fits their needs. To that end, potential buyers may put in a “low-ball” offer on a house they truly want. They may risk losing a home that meets all of their qualifications by placing an offer that is five or ten thousand dollars less than a price the seller is willing to accept. What can be even more frustrating is that even if a buyer's offer is accepted by a seller, the buyer may just waste that money, or more, on the mortgage they acquire.

Buyers may be surprised to learn how much even a half of one-percent difference in a mortgage rate can make.

Example One

In our first example, after a down payment, a buyer gets a mortgage for $250,000 over 30 years at 4.5% interest. The monthly payment would be about $1,267 monthly. Over the course of 30 years, those payments would total $456,120. The net cost of the loan is $206,120.

Example Two

In our second example, we take that same $250,000 mortgage over 30 years, but the buyer compared mortgage rates and was able to find a lender offering that same loan at 4.0% interest, one-half of one-percent less. The monthly payment would now be $1,194, totaling $429,840. The net cost of this loan is $179,840. The difference between the two loans is $26,280. All because of a .5% interest rate difference. 

The Best Way to Save Money on a Home

Rather than chancing to lose a home you really like by making an offer that is too low, consider instead performing due diligence on mortgage rates. Seeking out a lower rate can be critical in saving you five, ten or twenty thousand dollars or more. That's a far better solution than losing a home you really wanted.

There are a lot of factors that go into determining loan rates for mortgages. These include the buyer's credit rating, work history, income to debt ratio and loan to value ratio. The bottom line is the better your credit the more options you will have in securing a mortgage loan.

One of the best ways to save money on buying a home is saving money on your mortgage rates. The best way to do that is by monitoring your credit rating and working to build it. When it comes time to buy a home, get pre-qualified and compare mortgage rates. You can even use an online calculator to compare rates on your own. Need further assistance in determining how to find the right mortgage for you? Feel free to reach out, and we can embark on your mortgage and home journey together.

About the Author
Author

Sally Hechter

Sally Hechter is a realtor with Cummings & Co. Realtors, specializing in Harford, Baltimore, and Cecil Counties, as well as Baltimore City. Attributinginvaluable traits like patience, integrity, and a diligent work ethic to her accomplished real estate career, Sally prides herself on the personalized service she provides her clients from start to finish. Known as a connector, Sally believes that real estate is all about the relationship, not the transaction. In 1995, Sally developed an interest for real estate while managing properties in which she personally invested. In 2006, she turned her personal hobby into a career by becoming a licensed real estate agent in Maryland. Since then, she has been an independent realtor and also worked for RE/MAX American Dream. Sally joined Cummings & Co. Realtors in 2017. With a background in education, Sally believes in the value of learning current market trends, evolving with the business and consistently polishing her real estate expertise. Her designations and certifications include: •ABR, Accredited Buyer Representative •SRS, Seller Representative Specialist •Executive Club, RE/MAX American Dream, 2014, 2015 •100% Club, RE/MAX American Dream, 2016 •Peak Producer, Buffini & Company, 2013 •CDPE, Certified Distressed Property Education, 2009 – present •Harford County Association of Realtors, 2006 – present •National Association of Realtors, 2006 – present As a passionate community leader, Sally is on the alumnae executive board atMercy High School. She is also a founding member of the core development team of the Spark Family Ministry, that creates opportunities for families to be involved in the Church of St. Mark in Fallston, MD. Sally is a graduate of Towson University with a Bachelor of Science in mass communications. Born and raised in Maryland, she has lived in Baltimore City, Baltimore County, and currently resides in Harford County with her family. Sally enjoys doing anything outside, including kayaking, sailing, walking, and gardening.