Mortgage Expenses - How to Cut Costs and Save more Money
How to cut costs on your mortgage
Buying a home is so expensive and if you are like me, you want to save all the money you can on such large expense. There are some things you can do to cut down on costs.
1. Try to get a shorter mortgage, or at least consider it. By getting a shorter term on your mortgage, you will pay less interest overall. Your monthly payments will be bigger, but if you can afford that, then take that option. Just for example, if you were able to get a 15 year mortgage instead of a 30 year mortgage, you could cut your costs by up to 55 percent! That is a huge amount of savings. Some banks offer 20 year mortgage options as well. Look around and see what you can do to cut down on the time frame if you can. On a twenty year mortgage for instance, you can reduce the overall interest costs without significantly raising your monthly payments. This is definitely something to consider!
2. Why not look into amortizing or paying off your loan faster? This has always been one of my main questions when going over the paper work of a new mortgage. Ask about paying bi weekly as opposed to monthly payments. Find out about paying just an extra payment whenever you want in a given month. You don't want to be penalized should you make extra payments or pay things off quickly. Be in communication though about it before hand just so you are completely aware of all the details.
Consider paying bi weekly for a moment. If you do that, you end up making about 26 payments a year instead of 12 payments every year. Your mortgage is paid off in about half the time. You will pay little more than half the interest.
If you pay an additional payment every month, you reduce your principal. With a fixed rate mortgage you will pay off loan quicker but your normal monthly payments still stay the same. Interest can be figured on a smaller principal each time your rate is adjusted, with an ARM. In that case your monthly payment could become lower.
Make sure that your lender knows that you want any extra payments to be credited toward your principal if you do choose to go with these options.