18. Save $300 per month – Refinance mortgage or renegotiate mortgage with bank
Refinance you mortgage. If you can reduce your interest rate by one percent or more, it is often beneficial to refinance. This is particularly true for those with high rates due to less than stellar credit scores. If your score has improved, you may qualify for a better rate. I would start by asking your current mortgage lender about lower rates. Check out BankRate.com to shop for the cheapest mortgage rates.
You can refinance your mortgage, renegotiate mortgage or convert the mortgage (like with 15 year of payments still to do, convert a 30-year mortgage into a 15-year mortgage).
First we called our mortgage company and asked if we could refinance for the lower interest rate without taking out any money and they said we could and it wouldn't cost us any money! We already had a low rate but it is even lower! We saved $200 a month in interest on our mortgage! I couldn't believe it was that simple. Then, since we have a basement with an extra kitchen that we do not use, we started renting it out for more than half of our house payment.
Another tip is, if you have a mortgage... talk to your company or local non-profit org about a modification while riding out this economic storm... that may save some $100's.
Ask about builder incentives to reduce loan costs.
Leave some breathing room in your budget. Consider a smaller mortgage that won't tie up too much money not more than 28 percent of your gross monthly income.
If you live in an area with increasing home prices, buy a rental property. Live in it for two years to avoid capital gains when you sell.
Here are 10 ways to save money on a mortgage:
1. All else being equal, choose the lender that has the lowest interest rate. Use a home affordability calculator to find out the answer to the question that often haunts you, " How much house can I afford?" Determining this will give you an idea of how much mortgage you can go for. This will help you overcome financial problems since the loan amount calculated will stay within your budget.
2. Opt for a fixed interest rate throughout the length of your loan at a rate that is affordable for you. You won't face any hitches at some time in the future.
3. If you select an adjustable rate mortgage, you can adjust it on a quarterly basis. You should do it if you feel that rates will drop temporarily and the lender provides a rate cap. Be aware that the interest rate on most adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month.
4. Raise your down payment or equity so you will borrow only as much as you need. If, however, you have the opportunity to invest your money at a higher rate, then put down only the minimum amount of equity possible.
5. Reduce the term of your loan. Your interest costs will diminish. Making additional payments can also reduce your loan term since they pay down the principal more quickly. If you don't do this, the major part of your payments go towards the interest. As a result, it takes more time to pay off the loan. You can shorten your loan term by nearly 10 years just by making one extra payment per year. You may save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford. On a $100,000 fixed-rate loan at 8% annual percentage rate (APR), for example, you will pay $90,000 less in interest on a 15-year mortgage than on a 30-year mortgage.
6. If you're buying a home, don't be afraid to ask the seller to pay all or a part of your closing costs. A lender typically limits the amount a seller can pay to anywhere from 3% to 6% of the purchase price. This could save you thousands of dollars.
7. Make biweekly mortgage payments, which allows you to repay your loan sooner. Ultimately, this also helps you save money on interest. As an alternative, pay more on each mortgage payment. As an example, if your mortgage payment is $530.00, pay $600.00. It's amazing how much that little extra helps to bring down the principle balance.
Switch from Monthly payments to Bi-Weekly payments:
Many lenders allow you to pay your mortgage bi-weekly instead of monthly. Making bi-weekly mortgage payments can help you to pay off your mortgage between six and eight years earlier than you would with monthly payments. And that means you’ll save a huge chunk of cash on interest.
On that $300,000 loan at five percent, you’d be looking at a bi-weekly payment of $805 instead of $1,610 monthly. And over the life of the loan, you’d save $51,493 by paying your mortgage every other week instead of monthly.
8. Go for refinancing your mortgage if rates become so cheap that it is reasonable to do so. There are, however, other considerations to take into account when trying to decide to refinance. Consider refinancing your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and plan to keep the new mortgage for several years or more. Ask an accountant to calculate precisely how much your new mortgage (including upfront fees) will cost and whether, in the long run, it will cost less than your current mortgage.
9. If possible, negotiate lenders "garbage" fees like the loan origination fee, processing fee, underwriting fee, etc. Don't hesitate to ask that these be reduced. Shop and compare homeowners insurance policies. You can probably get one with a lower rate than any offered by an insurance carrier of your lender.
10. If you are getting your mortgage through a bank that you do business with, request that your overall business relationship be taken into consideration. It could lower your interest rate if you have a substantial amount of deposits or other dealings.
That said, my husband and I are currently carrying a mortgage because, like most people, we didn’t have the cash to purchase a home. BUT, I’m in the process of refinancing from a 30-year term to a 15-year term, which will save nearly $100,000 over the course of the loan. If interest rates hadn’t declined significantly since we took out the loan, we would simply pay a little more on the principal each month rather than go to the expense of refinancing.
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