10 Tips For Saving On Your Mortgage
You’re already paying tens of thousands of dollars on a home; undoubtedly you don’t want to spend several additional thousands on closing costs interest rates and other hidden costs.
Ways to save on your home mortgage aren’t immediately obvious especially when you aren’t familiar with all the ways lenders tack costs into the total amount of the mortgage.
Use these tips for ways to save money on your home mortgage.
1 Make sure you are choosing the right type of home mortgage. When it comes to the total cost over the duration of the loan the 30year fixedrate home mortgage is the most expensive with one exception.
2 If you plan to live in your home for the length of the loan it is the best home mortgage.
3 As you shop for mortgages take into account how long you plan to be in your home. Let that length of time determine the type of mortgage you get.
4 For shorter periods of time choose an adjustable rate mortgage longer ones choose a fixed rate.
5 Negotiate with your lender.
There’s nothing wrong with asking your lender for a better interest rate or to eliminate some of the fees associated with the home mortgage.
Consider the fees for which the lender make no money: appraisal inspection fees processing fee title fees private mortgage insurance and credit report fees.
Anything outside of these fees is fair game to be negotiated with the lender. Don’t hesitate to ask your lender to take away some of the unnecessary fees.
6 Make payments more frequently.
7 If you get paid on a biweekly basis consider making biweekly home mortgage payments.
8 Each time you make an extra payment even if it’s just one it shortens the life of your loan. By making two payments a month instead of one it takes you a little over 23 years to repay a 30year fixedrate mortgage.
9 Make extra payments.
Any extra payments you make toward your home mortgage go toward the principal of the loan.
So the balance of the principal rather than the interest is reduced by any extra money you pay.
When you do this you can reduce your home mortgage payment dramatically. Before you make extra payments make sure your agreement did not include a cost for early repayment.
10 Avoid paying private mortgage insurance.
You are required to pay PMI when you make a down payment less than 20 percent of the amount of the loan.
The amount you pay in PMI could be used to make extra home mortgage payments or invested in a high yield investment account.
If you are already paying PMI watch your equity closely and drop the insurance once you have 20 percent equity in your home.
There’s no sense in paying extra money in interest and other home mortgage costs unless you absolutely must.
By using just one or two of these methods you can save hundreds or even thousands of dollars in the total cost of your mortgage.
When you take steps to reduce your costs make sure you aren’t decreasing one cost and increasing another simultaneously.
About the writer: Martin Lukac http://www.MartinLukac.com represents http://www.RateEmpire.com an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance investing taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal 1 American Financial found at http://www.1AmericanFinancial.com
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