First Mortgage Loans

Even though your monthly payment may more expensive, you can possibly save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford. For each $100,000 you borrow at a 7% annual percentage rate (APR), for example, you will pay over $75,000 less in interest on a 15-year fixed rate mortgage than you would on a 30-year fixed rate mortgage.

Thousands of dollars can be saved in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15-year $100,000 fixed-rate mortgage, lowering the APR from 7% to 6.5% can save you more than $5,000 in interest charges over the duration of the loan, and by signing for two points instead of three you would lead to save an additional $1,000.

Check online and the local newspaper for mortgage rate surveys, after which contact several lenders for information about their rates (APRs), points, and fees. If you decide to use the services of a mortgage broker, compare their offers with those of direct lenders to ensure your getting the best deal.

Note that the interest rate on adjustable rate mortgages (ARMs) can change a great deal over the duration of the loan. An increase of a few percentage points might raise payments by hundreds of dollars a month, so verify with your lender what the highest possible monthly payment may be.

First Mortgage Loan consumer tips have been adapted from "66 Ways to Save Money", a free consumer guide availabe through the Federal Reserve website.

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