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A Mortgage
Start by pushing your credit rating as high as possible by paying off your card balances and making payments on time. Lenders use your credit score to set the interest rate on your mortgage; a good score will save you thousands of dollars. If you're buying your first home and think you'll probably move again soon, check out hybrid mortgages: The interest rate is often fixed for the first five years (before it becomes adjustable) and is typically one percentage point lower than on a 30-year guaranteed-rate mortgage. If you're buying a house you plan to stay in forever and can handle the higher monthly payments, a 15-year—instead of a 30-year—fixed mortgage is your smartest move. The shorter term saves you a bucketload of interest costs.

Make lenders clearly spell out every closing cost, and don't be seduced by the annual percentage rate (APR), which is the interest rate plus all the other closing expenses. This rate assumes you'll stay in the home for the entire length of the mortgage; because many of us won't stick around that long, the APR is fairly useless. Instead shop for the lowest basic interest rate and then compare the actual dollar amounts of all additional fees. Check out mortgages at your bank; banks tend to offer their customers good deals. Also take a look at online offerings at eloan.com and lendingtree.com. —Suze Orman


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