There are a number of ways to save money on a log home mortgage. You have to do your own homework. It’s your money and your responsibility to see that you get the most for that money.
- Drop the PMI! PMI or Private Mortgage Insurance, is generally required if you are not putting down at least 20% of the loan amount. This is to protect the lender against your defaulting on the loan and is required because without it they feel you don’t have a large enough stake in the loan to ensure its payment. If you can cover 20% down you can save this additional cost. It’s also worth checking your home’s value as it can fluctuate and bring your down-payment within the limits required.
- Check the interest rates offered! Obtain several loan offers and compare them. I know this sounds obvious but it pays to shop around. It’s also important to consider the points, fees, terms and lenders reputation. If it’s important to you to have a friendly, local face you can speak to, that is also worth throwing in the mix. The APR or annual percentage rate includes all the cost of the credit, including mortgage insurance, interest, and points.
- Watch the fees! Go back to your loan offers and compare the closing costs, points or origination fees. This can be a killer if you are attracted by a low interest rate but miss the high origination fees involved. There are also title fees, credit report charges and appraisal charges that may be charged and need to be compared.
- Float a balloon! You can structure the loan so that there is a large lump sum due at the end of a fixed period of typically 5 – 10 years. This lowers your monthly mortgage payments and defers the payoff until the end. But be careful that you will have the money when it comes due or you may be taking a new loan to cover this.
- Consider a shorter-term mortgage! If you amortize your loan over 15 years instead of 30 years you will pay a higher monthly mortgage payment, but overall you will be using your lenders money for a shorter time and will pay less for it.
These are a few ways to save money on a log home mortgage. Be sure and do your due diligence checking terms, fees and lenders reputations. You have to take responsibility for your money and don’t take anyone else’s word for it.
Check out these further mortgage money-saving tips for more ideas on reducing the cost of your log home mortgage and learn more about the process with our log home financing primer.
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Financing Your Log Cabin Renovations: A Guide Understand your options by following our guide to financing your log cabin renovations.
Financing land: A Complex Transaction Financing land can be complex. You need to know your options and consider some important factors.
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Understanding the Cabin Mortgage Loan Process When lining up a mortgage loan package for your log home it’s important that you shop around and find the one that best suits your financial needs overall.
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