Look for a mortgage like you shop for a car

Look for a mortgage like you shop for a car. Haggle. It’s tougher to haggle today, but you can negotiate the rates and terms of a loan, especially if you comparison shop. “Looking For The Best Mortgage” spells it out, The Mortgage Professor can school you on the math of comparing. Go with a fixed rate even if the adjustable rate mortgage (ARM) carries a lower initial interest rate. A fixed-rate loan gives you a monthly interest-and-principal mortgage payment that won’t change.

The extra risk the bank takes is passed onto you in the form of higher costs. “If you have income that’s easy to document, such as regular statements from your employer or a monthly Social Security payment, it’s probably not worth paying extra over the long term of the loan just to save a few days during the application period,” said Mira Marshall, an FDIC senior policy analyst.

Consider a loan with a shorter term, 15 instead of 30 years, 30 years instead of 40 years, provided you can afford the higher payment. Over the term of the loan you’ll pay less interest. Also consider paying off your existing mortgage sooner with extra payments earmarked for the principal each month. “This is an easy way to pay off the loan and save thousands of dollars in interest charges without incurring the cost of refinancing,” said Marshall.

If you are eligible, you can save on interest rates, closing costs, down payments and other terms and get some extra tax benefits, say with a Mortgage Credit Certificate . Don’t drain your equity. Equity loans — pulled from the difference between your loan balance and the property’s value — are, by nature, equity draining loans.

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