How To Save Money On Your Mortgage

How To Save Money On Your Mortgage



How to​ Save Money on​ Your Mortgage
Understandably,​ when most home buyers look for a​ mortgage,​ their top priority is​ to​ get the​ lowest monthly payment .​
But it’s a​ better idea to​ look at​ how much it’s going to​ cost you​ over the​ long term,​ in​ both interest payments and fees .​
By looking at​ these costs,​ you​ can save a​ significant amount over the​ years.
Even if​ you​ already have a​ mortgage,​ there are still a​ number of​ strategies you​ can use to​ reduce the​ total amount of​ interest you’ll pay .​
Most of​ these accelerate the​ speed with which you​ repay the​ loan,​ and that reduces your long-term interest costs.
Here are some ways to​ reduce the​ long-term cost of​ your mortgage:
Compare offers
It always pays to​ get offers from several lenders when you’re shopping for a​ mortgage .​
Offers can vary substantially .​
Especially if​ your credit is​ considered sub-prime,​ you​ shouldn’t accept a​ high-interest rate mortgage without looking for a​ better offer .​
Consider fees
One factor that increases the​ cost of​ your mortgage is​ the​ fees or​ points lenders add onto the​ deal .​
Look at​ these carefully,​ and don’t be reluctant to​ challenge fees that seem too high .​
Compare offers using the​ annual percentage rate (APR),​ which includes both the​ interest rate and the​ fees .​
Shorten the​ term
If you​ intend to​ be in​ the​ house for some time,​ you​ can lower your interest costs substantially by choosing a​ shorter mortgage term .​
This will increase your monthly payment but enable you​ to​ save significantly over the​ life of​ the​ loan .​
It may also enable you​ to​ get a​ reduced rate on​ the​ mortgage .​
For example,​ you​ can save $66,​364 over the​ life of​ a​ $100,​000 mortgage by choosing a​ 15-year term at​ 5.75 percent versus a​ 30-year term at​ 6 percent.
Pay bi-weekly
Consider paying your mortgage every two weeks instead of​ monthly .​
The difference is​ hardly noticeable,​ but this can cut the​ amount of​ interest you​ pay since your principal decreases more steadily .​
And,​ since there are 26 two-week periods in​ the​ year,​ you​ actually make an​ extra monthly payment each year,​ further shrinking the​ principal.
Cut the​ PMI
If your down payment is​ less than 20 percent of​ the​ house price,​ you​ may be required to​ take out private mortgage insurance (PMI) .​
However,​ once your mortgage principal decreases to​ 80 percent of​ the​ home’s value,​ you​ can petition your lender to​ cancel the​ insurance .​
This may happen after you’ve repaid some of​ the​ principal,​ or​ if​ the​ home’s value rises quickly .​
You may have to​ have the​ house reappraised,​ but the​ savings should make the​ expense worthwhile.
For more ways to​ save money on​ your mortgage,​ visit www.lendingtree.com/cec/yourhome/yourmortgage/how-to-save-money-on-your-mortgage.asp




Related Articles:




Powered by Blogger.