If you’re looking for ways to save money on your mortgage these days (and who isn’t?), then this post is for you.
Everyone’s feeling the pinch these days, and the largest expense for the average household is the cost of housing.
Thankfully, there are some easy steps you can take to decrease your monthly mortgage payment or even reduce the total amount that you’ll pay on your mortgage throughout the life of the loan.
Here are just a few of the options you have if your mortgage is a bit overwhelming.
1. Pay a Few Extra Dollars Each Month, Save Thousands in the End — By paying just $100 more a month on your loan, you could easily save between $50,000 and $100,000 over the life of your mortgage (potentially more if you have a large loan).
Simply put, each dollar that you pay as soon as possible is one less dollar that will accrue interest over the years of your payments.
If you have any wiggle room in your budget, even $50, consider putting it to your house payment.
2. Use a Government Sponsored Loan Program to Purchase a Home — Because they are underwritten by various government agencies, FHA, VA, and USDA loans can save borrowers a substantial sum over traditional loan programs.
Each is ideal for lower-income buyers or those who have had some credit trouble over the past few years, and each features a variety of financing options, including low or zero down payment and the ability to roll closing costs into the loan.
3. Choose a Bi-weekly Payment Plan — If your mortgage has the option available, choose a bi-weekly payment plan instead of a monthly one.
Since most people get paid bi-weekly, synchronizing your mortgage payment with your paycheck can make budgeting much easier.
Plus, you’ll end up making the equivalent of one extra monthly payment a year, saving you money on interest later.
5. If Your Payment is Too High, Refinance — Refinances are at an all-time high lately, and it’s no wonder.
Refinancing your loan can save you plenty of money each month, particularly if you’ve been paying your mortgage for several years without refinancing before.
Since interest rates are incredibly low right now and since you’ve paid a bit on the principle of your loan, you’ll most likely get a lower monthly payment.
In addition, refinancing can give you the opportunity to consolidate other debt or get cash out of your house for improvements.
5. Consider an 80-10-10 Mortgage — This option is actually two mortgages that are combined to eliminate the private mortgage insurance payments that buyers pay if they do not have the traditional 20% down payment.
80% is financed as a first mortgage, 10% is a second mortgage and the other 10 percent is typically cash down payment.
These loan payments are can be deducted via tax, while in the case of PMI payments it’s a reverse.
Most importantly, consult a financial advisor or mortgage loan professional for all of your options before you proceed with any of these steps.
A loan advisor is an expert and can use a variety of resources to get you the best rate, payment, and financing for your specific situation.