Easy Ways to Save Money on Your Mortgage
The road to homeownership for most buyers begins with a mortgage. While purchasing a home is a joyous occasion, the mortgage is in the top three expensive expenses in most households. Reduce mortgage expenses by trying these suggestions.
Homeowners desperate to cut costs should consider downsizing. Moving from a large house to a smaller one reduces mortgage payments, which means homeowners can fulfill mortgage contracts faster. Money earned from selling the larger house can contribute toward fulfilling mortgage obligations. Additionally, downsizing reduces utility bills, property taxes, mortgage insurance, and mortgage payments.
Private mortgage insurance, or PMI, applies to borrowers who paid a down payment less than 20%. The PMI protects the lender because the lender covers outstanding mortgage gaps. Avoid the payment by paying 20% or purchase an affordable home where it’s easier to pay 20%. An unobvious way is joining the 80/10/10 program lenders offer, where 80% is mortgage borrowing, 10% is down payment, and 10% is from a second lender to avoid PMI. Last, borrowers can negotiate with lenders to eliminate PMI once 20% of the mortgage is paid.
Besides negotiating PMI payments, negotiations offer borrowers an opportunity to adjust the mortgage contract. Negotiate with the lender to waive or reduce fees, lower rates, and lower monthly payments. Ask for a lock-in to maintain the terms for a specified period. Get the final deal in writing, review it, and sign it.
Make One Additional Payment Yearly
Paying thirteen monthly payments yearly instead of 12 doesn’t appear as a money-saving solution. Yet, paying more now saves money on interest rates in the long term. In addition, an additional payment yearly pays off the mortgage faster. An alternative, yet aggressive strategy is paying mortgages twice a month, or 24 payments yearly.
Adjust Home Insurance
Mortgage lenders require home insurance for borrowers. Lenders have specific guidelines about what home insurance policies are acceptable and which are not. The flexibility is selecting the insurance provider. Shop around and select an affordable insurance provider with a policy meeting lender qualifications. A reduction in home insurance payments creates breathing room from extremely expensive mortgage payments.
Mortgage contracts achieve an American dream, yet the wallet is making the sacrifice. With these suggestions, homeowners can maintain mortgage payments while securing a money cushion for splurges, emergency funds, retirement, and paying additional debt.