Money Saving Ideas ToCut Down Mortgage Costs
A few money saving ideas and strategies to help decide if your mortgage financing is the best for you.
In the recent economic environment, some people are willing to listen to any ideas to help save or keep their house. Refinancing is at the top of the list, but it really isn't for everyone. One important factor to consider is how much it costs (closing costs) to get a lower rate. It is not recommended to refinance your mortgage if the closing costs can not be recouped over the length of the new loan.
Refinance to a lower interest rate.
Refinancing to a lower rate could put hundreds of extra dollars into your pocket monthly. It is only recommended to refinance if the new rate is 1 to 2 percentage points lower than your existing loan.
Refinance to a lower interest rate but continue to make the pre-finance payment amount.
Continue to pay the pre-finance amount, delegating the extra to be applied directly to the principal of the loan. This could potentially save tens of thousands of dollars and take years off of the life of your loan.
Refinance to a lower interest rate with a shorter term (15-year versus 30-year loans).
This most usually will not decrease your monthly payment. The biggest benefit of refinancing to a shorter term loan is that you will own your home sooner.
Make bi-weekly payments instead of monthly payments.
Paying bi-weekly instead of monthly is actually like making 1 additional payment per year. This payment option pays the loan off quicker with less interest over the life of the loan.
Pay alittle extra with each payment.
Using employment bonuses or paying a few extra dollars directly to the principal of the loan will substantially decrease the amount of interest.
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