4 tips to secure your best mortgage

Securing a mortgage can feel like facing a den of lions; enduring the application process -- having your finances poked and prodded -- and negotiating rates with a lender you don't know well enough to trust. While you may be cringing at the thought, put your game face on. This is a commitment and you want the best deal that will save you money upfront and/or in the long run. Here are four strategies to help you emerge victorious from the mortgage challenge.

1. Improve your credit score. This is perhaps the best way to lower your mortgage payments and upfront loan costs. Check your credit score and rectify any issues such as outstanding collections, judgements or high loan balances. This puts you in a position to reduce your points and your interest rate.
2. Avoid, or get rid of PMI. Private Mortgage Insurance, otherwise known as PMI, is insurance you must pay to protect the bank's interest in your property when your loan is more than 80 percent of the home's value. To avoid PMI, you must put at least 20 percent down at closing. If not, it's your responsibility to call your lender and have PMI removed from your payments once you've paid down the mortgage balance to 80 percent of the home's value.
3. Refinance to a lower rate. Mortgage rates for 15- and 30-year loans remain at historical lows! If you already own a home, shop around and check with lenders to compare rates for a possible refinance. Be sure to discuss how much each loan quoted will cost you upfront and in the long run. You could end up saving hundreds of dollars on your monthly payment, which means thousands over the life of the loan.
4. Buy a less expensive home. That is, buy a home you can better afford. You can fiddle with the interest rates and the loan terms to get into a larger home, but can you afford all of the expenses and extra interest that comes with it? Chances are if you buy a cheaper home, you'll have more money for retirement savings or your child's college education.

The process of securing a mortgage can be daunting. However, once you understand it and how to save money, you're good as gold!