For many homeowners, mortgage payments are their largest expense. Whether the payments are submitted bi-weekly or monthly, they can certainly cause financial and emotional stress - but what if they didn’t have to? By lowering your mortgage costs, you will not only reduce any mortgage stress you’re experiencing, but also save money throughout the process. Here are 5 ways to lower your overall mortgage costs.
- Make an extra payment each year: One of the simplest ways to lower your mortgage interest cost and save in the long-run is making one (or more) extra payments each year. Basically, these extra payments will help reduce the remaining balance on your mortgage without the need to pay interest. No matter if you make one large extra payment or multiple small payments, these will certainly speed up the mortgage payment process!
- Round up your mortgage payments: Although this may seem like a strategy to raise your mortgage costs, rounding up mortgage payments can actually save you tons of money in the long-run. For example, let’s say you have a $200,000 30-year fixed-rate mortgage with an interest rate of 3.8 percent. This means your monthly payments would be $932. By rounding up your mortgage payments to $1,000, you could save yourself years of money spent on interest payments.
- Eliminate your Private Mortgage Insurance (PMI): Private Mortgage Insurance is required if your down payment was less than 20 percent. As soon as your mortgage balance drops to 80 percent of the home’s appraised value, however, it’s important to cancel this insurance. This value will drop when your home value rises or you’ve made payments on your principal.
- Refinance to a lower rate: The most common way to save on mortgage payments is to refinance to a lower interest rate - and yes, there is a way to determine if the refinance will save you money. For help calculating the difference, see here.
- Lower your assessment: Depending on where you live, property taxes can become quite pricey. If you think your home’s value has dropped at all, then make sure to request a new assessment. This could help you reduce your monthly property taxes.
Of course, this is only a brief list of ways to save on your overall mortgage costs. For more information on mortgage financing, or to learn more about homeowner expenses in general, contact one of our mortgage specialists or download Transitioning Into Homeownership: Preparing for the New Expenses today.