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How
To Save Money On Your Mortgage |
For most people, purchasing a home is one of
the biggest investments they will ever make. Buying a house or
apartment usually involves a lot of money, especially if it is
mortgaged. The key to saving money on your mortgage lies in getting
the best available one for yourself. Although that may sound like an
obvious solution, essentially it is about utilizing available
avenues that will help you save quite a lot of money, especially if
you make your monthly payments on time. While everyone wants to pay
off their mortgage as soon as possible, it requires considerable
amount of planning to transform wishes into reality.
Ways
to save money on your mortgage:
There are several methods
to help you save money on your mortgage:
Seller financing:
This allows you to pay the amount directly to the seller over a
period of time, rather than borrowing money and paying all of it at
once. It enables you to negotiate a better rate of interest, and
avoid the numerous administrative fees charged by lending
institutions. Moreover, it saves you from the frightful mortgage
insurance. It also provides you with a secure source of income and
returns, without having to pay capital gains tax. The seller holds
the house as a collateral that can be taken back, if the buyer
defaults.
Debt Consolidation: When you reimburse your
mortgage, you often pay off a number of unsecured debts such as
credit cards, charge cards, personal loans and the like. The rates
of interest on home loans are relatively lower than those on
unsecured debts. Therefore, debt consolidation would help you to
bring down your monthly payments. In other words, you would be
paying an interest rate that applies to home loans on all your
unsecured debts.
Bi-weekly payments: This enables you to
make your mortgage payments at a faster rate. You do this by paying
half of the monthly payments every two weeks. Hence, you will have
paid 13 monthly payments by the end of the year, instead of 12.
Thus, by using this method, you could save a lot of money on the
interest of your mortgage.
Refinancing: It is one of the
best ways to save money on your mortgage. It not only helps you
reduce the term of the loan, but saves a lot on the interest, and
even lets you get back your home sooner. You should opt for getting
a loan at a fixed rate, which would protect you from having to make
very high monthly payments because of increased interest rates,
provided you have an adjustable rate of mortgage. Refinancing would
prove to be the best available option to get a better mortgage,
especially if the value of your home has increased since you bought
it.
Pay off the interest as soon as possible: It might
prove to be advantageous to pay off the interest or principal,
comparatively sooner than what you would have, in the normal course.
This depends upon the mortgage you have, your financial strength,
and the rate of interest.
Fixed mortgage: This is the
safest way to save money on your mortgage. With a fixed rate of
interest, you will always know the status of your monthly payment.
Hence, there would be no scope for uncertainties, and even if the
interest rate drops, you can easily refinance to a lower rate of
mortgage.
Since paying off the mortgage is one of the
necessities of life for most people, you need to opt for ways that
ease the burden. It is important not to take the published interest
rates of a mortgage lender as the final word. Gather information on
all the available rates of interest, and various mortgage features,
from lenders in your area. Assess the pros and cons of each, and
decide on the one that meets your requirements. You should be able
to negotiate the interest rates effectively, and not hesitate asking
for better terms. Therefore, keeping the above-mentioned methods in
mind, you will be able to save a considerable amount of money on
your mortgage.
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