Saving money on your mortgage

Experts have loads of sage advice for how to save money

BY DEBRA GELBART

There are several important steps you can take to save costs associated with a new mortgage, according to two Valley mortgage experts.

Save, save, save: Save as much money as possible toward your home purchase “so you have the fexibility to make a larger downpayment, pay of debt or buy down the rate to save money on your mortgage,” said Kellie James, a senior loan originator with PrimeLending, a mortgage bank in Chandler.

Keep your FICO score high: Pay credit cards and other debts on time so your FICO score — a measure of your creditworthiness that lenders use to help determine the interest rate you can get — is as high as possible, James added. Also, keep credit card balances well below credit limits.

Pay attention to costs: James also advises borrowers to pay attention to the costs (such as discount points and fees) to get the loan — not just the rate. “You would be shocked at how many people make lending decisions based just on the rate with no concern for the costs,” she said.

Consider buying down the interest rate: ‘Discount points’ can lower the interest rate on your loan, but that can be a tricky decision. One point will cost you the

Passionflower II

• Great room with soaring vaulted ceiling

• Spacious kitchen with large island and roomy pantry

• Romantic primary suite with private entrance

• Home ofice ideal for den, play-room or study center

• Optional Extra Suite Plus in lieu of home ofice

• 4BD; 3BA; 1,977SF

Water Lily II

• Generously sized great room

• Pretty kitchen with expansive walk-in pantry

• Remote-work home ofice could be hobby/craft room

• Luxurious primary suite with two walk-in closets

• Versatile loft for play area or game room

• Included Extra Suite perfect for guests or multi-generational families

• 5BD; 3BA; 2,548SF equivalent of 1 percent of the total loan amount to bring down the interest rate, but it would probably NOT bring down the interest rate a full percentage point because — similar to movement in the stock market — interest rates and how many points are required to lower the interest rate fuctuate constantly, James noted.

Timing is (almost) everything: Te timing of getting a mortgage may afect your decision regarding buying points. “During a higherrate market, it may be advantageous to buy down in accordance with the predicted market rate reduction,” said Rosanna Ramirez, a mortgage loan originator with Vantage West Credit Union in Phoenix. But if rates are expected to drop a year from now, she said, you may not want to buy down the rate.

K. HOVNANIAN® HOMES West Santa Rosa Springs 16950 N. Dante Court Maricopa, AZ 85138 602-671-0452 www.khov.com/WSRS

Sales Ofice Hours

Daily (except Wednesday and Sunday): 10 a.m.–6 p.m. Wednesday: 1–6 p.m. Sunday: 11 a.m.–6 p.m.

Calculate break-even: “Te value of paying discount points is directly related to how long you plan to be in the new home and/or stay in that loan,” James said. “A lender should calculate a break-even point for clients to help them make a decision. If it will take the client more than fve years to save the amount of the points based on the monthly savings, they need to know that if they sell or refnance before fve years is up, they have lost money.”

Establish trust with your loan oficer: Establishing a trusting relationship with your mortgage loan ofcer is critical, Ramirez said. If they’re trying to earn your business, “you can expect they will propose the best moneysaving solutions they have,” she said.

Shop around: “Shopping lenders and comparing loan estimates is another way to save but be sure you are comparing the estimates objectively, paying attention to origination fees and the cost for mortgage points,” Ramirez said. “A savvy borrower will shop two or three lenders to compare estimates and ask questions when there are cost diferences.”