Saving Money on Your Mortgage

Saving money on your mortgage

There’s no denying that your home mortgage is costly. Houses cost hundreds of thousands of dollars; dollars you must repay with interest within a specified window – usually 20 to 30 years. If you could reduce the amount you actually pay back, you could save thousands of hard-earned dollars over the life of the loan. Here are a few ways you can do that:

Beforehand, make sure the type of mortgage you choose is the right type for your situation. The typical 30-year mortgage with a fixed interest rate is more expensive in the end, but probably fine if you’re actually going to be living in the home. However, if you only plan to be there for 10 years or plan to rent out the property, you might consider a short-term loan with an adjustable interest rate.
Don’t be afraid to negotiate with the lender. If your credit will support it, ask for a better interest rate. See if they’re willing to eliminate or at least reduce some of the associated fees such as appraisal fees, inspection fees, title fees, processing fees, etc. The lender makes no money from these and may be willing to bend a bit.
Increase the payment frequency. If you can make just one or two additional payments each year, it will help reduce the life of the loan and the amount of interest you pay in the end. Payments over and above those required each month are applied toward the principle of the loan, knocking down the total you owe. As a precaution, however, contact your lender to be sure there isn’t a penalty for early repayment of the loan.
If you make a down payment on your new home that is less than 20% of the total amount borrowed, you are required to pay Private Mortgage Insurance (PMI). If you can make a down payment of more than 20% of what you are borrowing, PMI is not required, saving you money each month. If you are already paying for PMI, check your home’s current equity and cancel the PMI once it reaches over 20%.

You work hard for your money, there’s no reason to be giving more of it away than you absolutely have to. Each of these tips can save you hundreds if not thousands of dollars over the life of your mortgage. That’s money that’s better off in your pocket, not the lenders.

Jim Miller is a full time full service licensed Realtor® in the Southern New Hampshire area with Bean Group and has many years of experience buying and selling New Hampshire Real Estate .

Contact Jim direct at 603-801-3987.

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