Mortgage Tips
Mortgage Tip #1:
Consider Two Mortgage Payments Per Month
(Bi-Weekly Mortgage Payments) Changing your mortgage payment from once a month to once every two weeks will help reduce your mortgage payoff time dramatically. If your mortgage payment is normally $1000/month, change your payment schedule to $500 every other week. By doing this you actually pay 13 monthly payments each year and possibly cut 7 - 8 years off of your 30 year mortgage.
Mortgage Tip #2:
Refinance Your Mortgage
If you can lower your current interest rate by 1.75% to 2% and plan to live in the same house for at least 3 to 5 more years, you should consider refinancing your mortgage. Consult a mortgage lender and calculate the exact cost of refinancing such as points, fees and closing costs to see if it makes sense for you.
Mortgage Tip #3:
Consider a 15 Year Mortgage Over a 30 Year Mortgage
A 15 year mortgage will likely raise your monthly but can save you thousands in interest expense in the long run.
Example:
30 year mortgage on $150,000 at 6.5% - Over 30 years you will pay a total of $191,317 in interest.
15 year mortgage on $150,000 at 6.5% - Over 15 years you will pay a total of $85,199 in interest.
As you can see from this example the 15 year mortgage will save you $106,118 in the long run, but will mean you have a higher monthly mortgage payment.
Mortgage Tip #4:
Consider an Adjustable Rate Mortgage
If you are planning to live at your home for a short period of time, you may want to consider an Adjustable Rate Mortgage (ARM). ARM's typically carry much lower interest rates than your typical fixed rate mortgages. Be sure to consult your mortgage professional about all fees and clauses when considering an ARM.
Mortgage Tip #5:
Shop Around For Your Loan
If you're ready to buy a home, try and shop for a loan first. If you make an offer on a house before looking for financing you may have to hurry through the process of finding the best loan. However if you visit a few mortgage lenders before you find your home you will know how much buying power you have and you won't have to rush. Once you find your home, re-visit your brokers and find the best deal you can.
Mortgage Tip #6:
Watch out for Lender Fees
Mortgage brokers and lenders must give you a good-faith estimate of your home loan and all the cost associated with the loan when you first apply for it. However, some shady lenders might not include every single fee they plan to charge which can amount quickly. It is always a good idea to try and get a copy of your closing statement a few days before you settle, allowing you a chance to dispute any fees that you don't agree with.
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