Family Tune - Saving Money When You Borrow Money

Credit Cards: You can save several hundred dollars each year by paying off your entire balance each month. If you are unable to pay off a large balance, use a card with a low annual percentage rate (APR). You can reduce credit card fees, which may add up to more than $100 a year, by getting rid of all but one or two cards and by avoiding fees for late payments or for going over your credit limit.
Auto Loans: If you have a lot of money in a low-rate savings account, consider making a large down payment or even paying for the car in cash. This could save several thousand dollars in finance charges. If you’re planning to get an auto loan, shop around for the best deal and perhaps save hundreds more in finance charges.
First Mortgage Loans: You may save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford. Save thousands more by shopping for the lowest-rate mortgage with the fewest points. Look in your newspaper for surveys of mortgage rates, or call at least six lenders, and then ask an accountant to figure out the cost and tax implications of each option. Be aware of the impact of interest rate increases on an adjustable-rate mortgage.
Mortgage Refinancing: Consider refinancing your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and you plan to keep the new mortgage for several years. Ask an accountant to help you calculate how much the new mortgage (including up-front fees) would cost and how that compares to your current mortgage.
Home Equity Loans: Be cautious taking out a home equity loan because it reduces the equity you’ve built up in your home and you could lose your home if you can’t make the payments. Compare home equity loans offered by at least four banking institutions. Look at the APR as well as points, closing costs and other fees, and the indexfor changes to a variable rate loan.