In today’s economy many are struggling to keep their homes and pay off their mortgages. These 7 easy tips can help you keep up with your mortgage payments and pay your mortgage off even sooner and it won’t be any more expensive than what you’re already paying.
Pay One Extra Payment Every Year
Extra payments are automatically added to the principal of the loan, not the interest. By applying this to the principal you’re not paying any interest on that amount of the loan and you will shave approximately 5 years off of the life of your loan. To come up with funds for the extra payment consider tax refunds or work bonus checks. Painless payment and no extra cash out of pocket.
Make Bi Weekly Payments
As in above, making a bi weekly payment will shave off approximately 5 years of the home loan. Simply pay half of the mortgage twice per month in lieu of one lump payment each month. Bi weekly payments mean 26 bi weekly payments or 13 complete payments per year in lieu of the usual 12. Again, just one extra payment every year.
Eliminate Private Mortgage Insurance (PMI)
Most lenders require Private Mortgage Insurance (PMI) if the down payment is less than 20 percent of the loan. If the home value goes up or as the principal of the loan is paid off lenders can often be petitioned to drop this form on insurance thus saving you the tidy sum of a few hundred dollars per month. Generally speaking, once the mortgage balance is below 80 percent the lender can waive this PMI insurance.
Check Your Home Value Periodically
How much is your property valued at? An assessment could save several hundred dollars per annum. Let’s face it, taxes can be expensive. If your home hasn’t be assessed in the last five years you could be paying more in taxes that your home is actually worth. Once you have a current tax assessment in hand you can petition the assessor and possibly reduce this part of your payment.
Reset That Mortgage
Have you been making that extra payment every year? If so, you may be able to reset your mortgage with this seldom used trick. If you’ve been reducing the principal of the mortgage in this fashion the term of your loan is reduced, but when the loan is reset the monthly principal and the interest are recalculated and there will be a lower monthly payment as well as a shorter term loan. This could wind up saving you at least $100 per month or $1200 annually. Don’t forget to continue making that extra payment every year. The savings on this tip can really add up over the course of the loan.
A loan modification allows you reduce the rate, terms or principal balance of the loan. If you’re going through a financial hardship due to a death, job loss or other circumstances don’t wait until it’s too late to contact your lender for an evaluation. Explore this option as soon as possible. It may extend the overall term of the loan and reduce the principal.
Have you been making those payments on time? Have you been paying an extra payment for a few years? If so, your credit score may have gone up and you may be eligible to refinance at a better rate. Although there is a fee to refinance and that means money up front, most home owners recoup their initial refinance cost within four years. If this saves just $100 per month it’s well worth the effort.
Using these tips will help you to pay your mortgage off more quickly and have a financial peace of mind.