When refinancing most people tend to focus on just the monthly payment amount and on little else. While the monthly payment is an important factor the real focus should be on the long term costs associated with the loan. By making the right choices in the beginning of the mortgage refinance you can literally save yourself thousand to tens of thousands of dollars over the life of the loan. Below you will find some common ways to save maximum money the life of over your mortgage.

Simple Tips For Getting The Best Mortgage For Long Term Savings

Pre Payment Penalties- Although they are considered bad by some experts adding a pre payment penalty to your loan can reduce your interest rate by a small amount and therefore reduce your monthly payment. Over time that small amount adds up to a huge savings. Plus a pre payment penalty is basically pre paid interest so in the event you have to actually pay it you should be able to deduct it on your income tax.

Buy Down The Rate- Most mortgage lenders quote rates that have the ability to be bought down to a lower level. This is referred to as paying points. Buying points on a loan can reduce your interest rate a significant amount and that can add up to a huge savings over the life of the loan. However you must be sure you will not need to refinance or relocate for a few years or any points bought will be money down the drain.

Shorten The Loan Term- Its a very basic strategy but if you can switch your loan to a 15 year from a 30 year you will not only pay a lower interest rate but you will also save literally tens of thousands of dollars over the years. The only drawback to this method is that your monthly payments will be higher with than longer term loan, but as a benefit you will build equity much faster!

Pay For Your Closing Costs- Most people roll their closing costs into the loan. This makes it more affordable to refinance but it also increases your loan amount and the amount of equity you have to borrow. Add in the additional interest payments that you will be making on the higher loan amount and that money you did not want to spend on closing costs turns into a lot more money lost down the road.