Top Ways to Save Money – Mortgage Money Saving Tips
Among the top ways to save money – changing your attitude to your mortgage is the most cost effective one.
The
most expensive item you are ever likely to buy is your home. If you’re not in the privileged position to pay cash, make sure the loan you use to finance it is the best available. Here are some money saving
tips concerning your mortgage.
Refinance Your Mortgage
When dealing with mortgage, even a small change of only 0.25% less in interest rate translates to more than a thousand dollars.
Because refinancing involves extra fees, as rule of thumb it is usually beneficial to refinance your mortgage if you can reduce your interest by more than 1%.
This is particularly true for those with high interest rates due to less than stellar credit score. If your credit score has improved, you may qualify for a better rate.
If you decide to refinance, start by asking your current lender about lower rates, and compare the whole deal to a refinancing deal with a different lender.
Get Rid of Your PMI (Private Mortgage Insurance)
If your down payment was less than 20%, you’re probably paying PMI.
PMI is an insurance policy in
behalf of your lender, and is costing you money on top of the regular mortgage payments. You should get rid of it as soon as you can.
Once you have a 20% cushion through reducing your debt or home appreciation (or in case that your home’s price went up), contact your mortgage company and start the process of removing the PMI.
Change Your Attitude to Your Mortgage
With mortgage being your most expensive loan, you need to make sure it is the best available.
As mortgage lifetime is very long, market conditions as well as your financial status keep changing, making a once best-deal-loan into a not-so-good one.
For example, if your financial status has improved and you can afford to make over payments on your mortgage, you’ll clear your debt several years early and make massive savings.
If you’re paying your lender’s full standard variable rate (SVR) you are probably paying hundreds of dollars a year more than you need to. Consider switching to a different type of mortgage.
If your loan-to-value (LTV) percentages has improved (due to increase in your home’s value or after a few years of reducing your debt) you may get a better loan or a better rate.
You should reevaluate your mortgage every two or three years, and make the necessary changes. There are thousands of deals to choose from and while it is vital to check the small print for hidden catches, this is a relatively easy way to save a lot of money.
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