If you are looking to save money on your mortgage, you have come to the right place. Whether you have a mortgage or are looking to take one on, it can be intimidating. There is a lot that goes into a mortgage, so saving money where you can is important.
Before you buy a home
Have a decent down payment
When you are applying for a mortgage, you should know that if you don’t have at least 20% down, you may have to pay for PMI insurance every month. It pays to have more money down because your monthly mortgage won’t be as expensive! If you don’t have 20% to put down then when your mortgage balance falls beneath 80% of the home’s appraised value, you can ask that the PMI insurance be dropped. This could save you a ton of money a month!
Pay attention to the interest rate
Before you sign those mortgage papers, you need to know your interest rate. Whatever your interest rate is will be what dictates your payments. Going too high on your mortgage interest rate can really hurt you down the road. Try to stay away from adjustable rate mortgages because although they tend to start out at a slightly lower rate you run the risk of having your payment go up when the rates are adjusted upward.
Go for the 15 year loan
When it comes down to trying to save money on your mortgage, going for the 15 year loan is clearly the right answer if you can fit the higher monthly payments in your budget. You pay a lot less in interest over the course of your loan by doing the 15 year mortgage and your home will be paid off much sooner.
After you buy a home
Pay extra each month
What? You want to know how to save money on your mortgage and I’m telling you to pay more each month?! Well, think about it. The more you pay now, the less you will owe later. Normally, there is no penalty when it comes to paying off your mortgage early. Throwing in a few extra payments can really add up and helps to reduce the term of your mortgage.
Modify your home loan
This is restricted to those who are having trouble making their monthly payments. However, a home modification is a real thing. Basically, you apply through your lender, get a reduced interest rate for a certain time-period.
Refinance your mortgage
If it has been a while since you bought your home, refinancing your mortgage can be a good thing. This is especially true if you are trying to reduce your monthly bills. Refinancing usually results in a smaller interest rate and a smaller mortgage.