Shopping for a mortgage is not an activity that most people enjoy. Because of this many people simply accept the first mortgage that is offered to them. This is generally a mistake. If you don't shop around for a mortgage you could end up paying tens of thousands of dollars more than you have to.

Factors That Increase the Cost of Your Mortgage

There are several factors that are going to impact the cost of your mortgage. Some of these factors you can control and some you cannot. The factors that you can't control are the federal prime rate and the qualifications that each lender uses to determine who is worthy of a loan and what interest rates they will be charged. While you can't change these factors there are a lot of other factors that you do have control over.
 
First of all you are in control of your credit score. The higher your credit score, the lower the interest rate you will be charged. To improve your credit score you will need to make sure that all of your accounts are in good standing, and you will need to make sure that you make payments on your account on time. Paying down your account balances is another way that you can improve your credit score and lower your interest rate. Improving your credit score by 25 to 50 points can save you thousands of dollars on your mortgage.
 
The next factor that you can control is which lender you choose. Every lender has the right to charge the interest rates that they want. If you want to save money on your mortgage then you really need to compare the interest rates charged by different lenders. Lender rates can vary by several points for similar credit scores.
 
The third factor that you can control is what type of mortgage you select. If you want the best mortgage rates, then you will want to select a traditional 80 percent mortgage. To qualify for this type of loan you will generally need good credit, you will need to have regular employment, your income will need to be adequate for the size of loan that you are applying for, and you will need to put down 20 percent of the home's value. Alternative loans like 80/20 loans and 100 percent financing loans are great for people who don't qualify for traditional loans, or who don't have a lot of money to put down on a loan, but they are a lot more expensive to use.

Other Ways to Save Money on Your Mortgage

In addition to utilizing the above strategies to qualify for the best basic mortgage rates, there are other ways that you can save money on your mortgage. The first way is to pay points at the closing of your mortgage in order to reduce the interest rate that your mortgage charges. A point is worth one percent of your mortgages value. While this adds an up front cost to your mortgage, it can end up saving you thousands of dollars over the life of your loan.
 
The second way to save money on your mortgage is to use an accelerated bi-weekly payment schedule instead of the traditional monthly payment schedule. In a bi-weekly payment schedule you would pay half of the monthly mortgage payment every other week. By doing this you end up paying 13 payments a year instead of only 12 payments. This helps you to pay off your mortgage faster, and it also reduces the overall amount of interest that you pay on your mortgage.
 
The final way to save money on your mortgage is to add money to your monthly mortgage payment. This added money will be applied directly to the principal amount owed on your mortgage. This will help you to pay off your mortgage faster, and it will also reduce the overall amount of interest that you pay on your mortgage.