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:: Mortgage Saving Tips :: |
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There are many ways to significantly reduce your mortgage in the United States and many reputable institutions advise they are simple to follow and can save you a lot of money over the life of your mortgage. If you are practical and vigilant you can reduce your mortgage to a shorter life span and put more money in your pocket.
One Additional Mortgage Payment a Year
First Fidelity Mortgage Services advises that one of those tricks "is to make one extra mortgage payment a year and apply that payment toward your loan's principal", also called the one additional mortgage payment a year method and can be found in such institutions using the bi-weekly mortgage reduction service programs.
One Time Payment
If you find that increasing your monthly mortgage payment is next to impossible in some situations, but, keep in mind that most mortgages will actually permit you to make payments to your principal at anytime. For instance, you may be able to contribute up to 15% at the end of each year which can be applied to the principal. This method allows you to save a significant amount of money taken off of the mortgage principal, thus leaving also a shorter loan period.
Short Term Mortgages
If you are in the position to make a larger monthly payment, you could actually look to save thousands of money in interest by going with the shortest-term mortgage that your financial institution has. For example, on a $100,000 fixed-rate loan at 7% annual percentage rate (APR) you would pay over $75,000 less in interest on a 15-year mortgage as opposed to a 30-year mortgage.
Mortgage Refinancing
Look at possibly refinancing your mortgage if it is possible to get a rate which is at least a percentage point lower than your current mortgage and keep that newly negotiated mortgage for several years. If you look at this method, consult with an accountant to have them calculate exactly how much the new mortgage would cost (including points, fees and closing costs) in the end and if you would in fact save money over your current mortgage.
Above all of these tips is the necessity to be extremely vigilant in finding ways to, once you have looked at and completed all the necessary savings tips, to ensure that you can make the payment schedules you have now opted for and to not, under any circumstances, fall behind in any payment structure, as any financial institution can at any point repossess your mortgage.
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