There are a number of mortgage money-saving tips you can use to lower the costs on the most expensive transaction you may ever make. Given the size of a log home mortgage, saving even a fraction of a percent can add up to real money in your pocket, or the possibility of being able to afford a larger home.
There are 7 key factors to consider for the most cost savings on your log home mortgage:
Check out these key mortgage money-saving tips to get the most out of your loan:
Although it may seem obvious, not everyone realizes that different lenders charge different rates.
Some lenders may take advantage of the fact that obtaining a mortgage loan can be a very complex and confusing endeavor and they obscure their rates. Other lenders may reduce their rates but raise their fees (see below).
Fees are a lenders profit. Some lenders are willing to make less on each transaction because they make it up in volume or by reduced personal service. Watch for terms like “points”, “costs” or “origination fees”.
The potential costs and savings on a high-dollar mortgage are too great not to shop rates and fees between competing lenders.
Structuring your log home loan with a balloon payment is called “floating a balloon”. This type of mortgage should be used with caution because a large payment comes due at the end of the loan period and you must be prepared for that.
Floating a balloon may feel like a mortgage money-saving tip until the lump sum comes due -- be prepared.
As the name implies, with an interest-only mortgage you pay only the interest for a certain fixed period. At that point the mortgage is fully amortized over the balance of the loan period.
An ARM, or adjustable rate mortgage, allows the lender to change the rate of your loan. This can be good or bad. If interest rates are dropping, your mortgage payments may be low or going down.
On the other hand, you have no guarantee that your mortgage payments won’t go up and you may not be able to afford the new rates.
This is another of the mortgage money-saving tips that you should use with caution. The attraction of a short-term savings can be offset by the long range raising of rates.
PMI, or private mortgage insurance, is typically required when you owe more than 80% of the value of your log home. This guards the lender against you skipping out because you don’t have enough invested in the property. Once you hit at least a 20% stake they figure you won’t want to cut and run.
With the tough economy the building industry has been particularly hard hit. Log home builders are struggling to sell cabins and may offer incentives you can use as a mortgage money-saving tip.
Hopefully these mortgage money-saving tips can help you to lower the costs on your log home mortgage.
We have a page of nationwide log home lenders who specialize in cabin loans and who understand the unique challenges presented by log home loans. They can also help you save money on your log cabin mortgage.
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