Shrink your Mortgage Costs and Monthly Payments
By Sadiya Anjum
Buying a home may be a dream come true and it represents a huge investment in your life. Undoubtedly you are probably waiting for the day when you clear your mortgage and call your home truly your own. When applying for a mortgage as well as over the term of your loan, there are several things you can do to lower your mortgage/ monthly payments. This will help you pay off your loan in a smarter way.
The first step is to obtain the right mortgage befitting your financial condition. If possible consult a financial advisor and after analyzing your financial state, he should be able to recommend the right mortgage plan for you. With or without a financial advisor, remember to always stay within your limits. Getting a loan which is too big for you or a plan that is not realistic in its approach is a recipe for disaster.
What you need to consider carefully is the interest rates. Not many people realize the amount of money they actually dole out for it over the term of a mortgage. Depending on the size of your loan, you may land up paying several thousand dollars just as interest. The smart thing to do is to watch the interest rates carefully as they fluctuate every now and then. Next you should obtain a mortgage when the interest is at a reasonable rate. The same applies when you are looking to refinance. Get ready to refinance when the interest rate is low.
Always look around before you settle for any loan. Shop for a lender who offers lower insurance rates. Try to eliminate Private Mortgage Insurance (PMI) from your loan as it does not benefit you in any way. A down payment of less than 20% usually calls for a PMI. Once you have developed a good credit history, ask your lender to dispense with the insurance. This can help reduce your monthly payments by a considerable amount.
When selecting a mortgage, also try to obtain one with a certain degree of flexibility. Pick one where the interest is charged only on the outstanding amount of the loan. Ask your lender about the details on a bi-weekly mortgage payment plan. You will be required to pay a half payment every two weeks instead of once a month. This will help you pay your loan the faster and smarter way.
If you are going through a financial crunch, consider a long term loan. This will help in bringing down your monthly payments for now. Once you are in a better situation, you can always foreclose the loan.
Another way to pay off your loan faster is to put in a little extra money every month. Study your mortgage and understand what signifies the principal and the interest. The extra amount you put in should be added to the principal. Just a few extra dollars can do wonders for you in the long run.
Speak to a mortgage expert and ask him to go over the various loans you have taken out – house, car, home improvement etc. See if you can consolidate all your loans into one with lower payments. Ask him for further details so you can make lower payments every month.
Whether you merge your loans or not, you need to keep track of the various payments you are making. You may be unable to reduce the purchase price of your home but if you stay smart you can reduce your payments in the form of interest. Try and pay off your mortgage as soon as possible, so you can live in a home that truly belongs to you.
Article Source: ChoiceOfHomes.com - Real Estate Listings OnlineThis article may NOT be reprinted in any form without the express written consent of ChoiceOfHomes.com
©Copyrights ChoiceOfHomes.com 2004-2006