Mortgage Costs And How To Reduce Them

Mortgage Costs And How To Reduce Them

Mortgage Costs and How to​ Reduce Them
Few people will ever pay more for anything than they do for their home .​
the​ prices of​ housing are continually escalating; the​ median price of​ a​ house in​ the​ United States is​ now more than $215,​000 .​
Adding to​ the​ expense is​ the​ mortgage interest .​
Over the​ life of​ the​ loan,​ most homeowners will pay approximately twice the​ cost of​ the​ house in​ interest alone.
Taking interest into account,​ the​ cost of​ the​ average American house now costs more than $500,​000 .​
But while everyone wants to​ own a​ house,​ few people relish the​ though of​ paying nearly one third of​ a​ million dollars in​ interest to​ their lender .​
And yet,​ many people do,​ seemingly unaware that there are things they can do to​ reduce the​ cost of​ buying a​ house .​

Here are some things that you​ can do that may help reduce the​ total cost of​ buying a​ home:
Eliminate your private mortgage insurance (PMI) - If you​ are making a​ down payment of​ less than 20%,​ your lender will require that you​ pay private mortgage insurance every month .​
This protects the​ lender against default,​ but it​ doesn't help you​ one bit .​
If the​ value of​ your house increases or​ if​ you​ pay down a​ portion of​ your mortgage,​ your equity may exceed 20% of​ the​ home's value .​
in​ that case,​ you​ can ask your lender to​ drop the​ PMI .​
the​ lender won't automatically do it; you​ must ask .​
you​ will also need to​ submit the​ results of​ a​ formal appraisal to​ prove the​ home's value .​
Should your lender drop your PMI,​ you​ can simply add the​ amount you​ were paying to​ your mortgage payment each month .​
the​ extra sum will help reduce your interest costs and will help you​ pay off your loan sooner.
Add to​ your payment - you​ can pay more than the​ listed amount each month .​
Any extra you​ add to​ your payment should be applied to​ your loan principal,​ which will contribute to​ paying off your loan sooner .​
Every little bit helps; even $10 or​ $20 per month would probably save a​ few thousand dollars over the​ life of​ the​ mortgage .​
Refinance your loan - If interest rates take a​ drop to​ one or​ two points below the​ interest rate on​ your loan,​ it​ would probably be worthwhile to​ refinance .​
the​ costs of​ refinancing can usually be recovered through lower payments within a​ few years .​
Depending on​ the​ interest rate and the​ size of​ your loan,​ you​ could save tens of​ thousands of​ dollars over the​ life of​ your mortgage .​

These are but a​ few of​ the​ ways that you​ can reduce the​ cost of​ buying a​ home .​
While there isn't much you​ can do about the​ price of​ the​ house itself,​ you​ can certainly do a​ number of​ things to​ reduce the​ amount that you​ pay in​ interest over the​ years .​
Every penny counts.

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