Six Unconventional Ways to Save Money on Your Mortgage: Navigating your way to better terms and point structures

Brokers don’t like things that are unconventional, and so if you use any of the following tips you will probably not make a lot of friends. Of course, how often is a broker your “friend” once the sale closes? With near certainty, one can answer, “Almost never.” So perhaps annoying the broker in order to save yourself some big bucks isn’t such a terrible thing after all.

Have you ever heard of a 6 percent seller’s concession? It’s a little trick that allows you to include closing costs in the price of the mortgage. This has two benefits. One, it means you don’t have to pay closing costs out of your own funds, and, two, it effectively makes the closing costs tax deductible. The way it works is that you tell the seller that you’d like to pay 6 percent more for the property – and then the seller rebates the 6 percent back to you at the closing and you use the funds to pay for the closing costs.

The negative with the 6 percent seller’s concession is that it increases the cost of your mortgage by a few dollars each month. Do the math and see if this is worthwhile for you.

If the existing first mortgage on the house has a low interest rate and is assumable, run the numbers and see if assuming the original loan will save you money. You will still have to get a second or some other financing to make up the difference between the balance on the loan you are assuming and the purchase price of the property, but in some cases this can still save you money, especially if current interest rates are higher than the existing assumable mortgage.

See if the seller would be willing to carry some of the financing. This way the seller can get a monthly income and you won’t have to qualify for such a large loan and pay as much in closing costs.

Get out the calculator and see what happens to your payments if you pay one or more points on the loan. If you’ve got a little extra cash to start with, paying points upfront could save you a lot of cash down the road.

Pay a little extra on your mortgage each month and designate the extra as a pay-down of the principal. You will be amazed at how much of a difference it can make to pay just an extra $50 per month if it is earmarked for paying down the principal of the loan. Your loan will be paid off several years sooner and you’ll save thousands of dollars in interest over the life of the loan.

Negotiate with your lender. The price he quotes you for a loan isn’t necessarily his best price. Get prices from other lenders online and use those to negotiate. You’d be surprised how flexible lenders can be sometimes.

Remember to keep an open mind and don’t be afraid to do or suggest something out of the ordinary – saving even a little at the beginning of the loan process can add up to tremendous savings over time.