Your mortgage payment is the single biggest monthly bill you have, right? And if you could save money on any bill, you would rather save on the big one, right? Well, here are a few tips to make sure you aren’t paying too much on your mortgage.
First of all, are you paying private mortgage insurance (PMI)? This is an insurance that insures the bank if you default on your loan. And worst of all, you pay for it. But, they only charge the PMI if you don’t have 20% equity. You might have only put 5% down on your house, so they stuck PMI on your payment. But did you know that as soon as you only owe 80% of the home’s value, the lender needs to drop the insurance? If you’ve had your home for a few years and are still paying PMI, it might be worth looking into getting an appraisal to find out if you can save that $50-$150 per month.
Next, make sure you are paying on time. If you’re late, and mortgages generally have 15 day grace periods, its costing you money! Even if you pay during the grace period, more of your money is going towards interest than if you would have paid on the first of the month, when it was due. But if you pay after the grace period, you will be charged a good chunk of change (usually in the $50 range).
Are you on the right terms on your mortgage? Did you know that a 15-year loan will save you over $100,000 in interest alone? It will cost a couple hundred dollars each month on your payment, but you’ll have your loan paid off early! Even if you are on a 30 year loan, its not a bad idea to put an extra $50 toward the payment. You’ll be putting that money into a loan thats costing you about 6% instead of a savings account that might be gaining 4% for you. It works out to save you quite a bit of money!
And lastly, if you don’t think you’re getting as good of a rate as you could be, you can always look into refinancing. But if you don’t lower your payment by at least .75-1%, it’s probably a waste of time and money, as refinancing is very costly.
Here are a few ideas that will save you some money on your mortgage…both short term and long term!