7 clever ways to save on your mortgage

Securing a lower interest rate on loans is a smart way to handle your personal finances — plus, it saves money. The interest mortgage lenders charge can vary greatly, and a one percent difference can save thousands over your mortgage term. And lower payments each month doesn't hurt.

Unfortunately, shopping around for the best refinance rates and deals can take time. In order to minimize the amount of hours you invest in the process, it can help to follow these seven time-saving tips to help make the process go smoother.

1. Use an online marketplace to compare rates

WHY IT'S A GOOD IDEA TO REFINANCE YOUR MORTGAGE WHILE RATES ARE LOW

2. Know your credit score

While you can qualify for a new mortgage or a mortgage refinance if you have a fair or even low credit score, you will likely pay a higher interest rate. Save time by knowing your score, so you can target lender requirements that are a fit for you.

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You are entitled to a free copy of your credit rating every 12 months from each of the three reporting bureaus. Order yours online from annualcreditreport.com, which is the only authorized website for free credit reports. Some banks will also provide customers with a free credit score through their online banking portal. If your score is low, take steps to improve it before you start the mortgage process, such as debt consolidation, which can lower your debt-to-income ratio.

3. Determine how much house you can afford

Instead of wasting time trying to qualify for a loan that won’t fit your budget, know how much house you can afford. Sometimes buyers don’t look at the full cost of homeownership, which include taxes and insurance. Some homes may also have homeowner association fees. And if you don’t put enough money toward your down payment, you could be required to take out mortgage insurance.

Add up your monthly debts, such as your vehicle or student loan, credit cards, or current mortgage. Then make sure your debt-to-income ratio with your new mortgage payment fits within the range mortgage lenders require, which is 43 percent or less, according to the Consumer Financial Protection Bureau. You can use an online mortgage calculator to determine potential monthly mortgage payments.

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4. Get prequalified

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5. Watch for hidden fees

Just as interest rates can vary between mortgage lenders, so do their fees. As you compare offers, look at the fine print to understand the total cost of the loan. Sometimes lenders offer low rates by charging up-front fees, called "discount points." Compare offers by removing discount points.

Also look at other mortgage features that can add to your bottom line, such as early payment penalties, balloon payments, adjustable rates, and settlement costs. A quick way to find the best offer is to look at its annual percentage rates (APR), which represents the total cost of the loan in terms of a percentage rate by factoring in the fees.

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6. Take advantage of options for veterans

If you're a veteran or a spouse of a veteran, you may qualify for a VA loan, which can offer low rates and no down payment or mortgage insurance. Unless you’re buying an expensive home or have a 20 percent down payment, you may want to start with VA lenders. This can be a great option for a first-time homebuyer.

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7. Work with experienced lenders

Shopping for a mortgage can be a time-consuming task. By knowing how to compare offers and streamlining the process, you can make sure it’s also a positive one. These steps can help you purchase a new home or refinance your current mortgage without wasting a lot of time.

HOW TO FIND THE BEST MORTGAGE RATES AND FASTEST CLOSINGS