6 Tricks to lower down the cost of a mortgage
If you take out a mortgage loan, you have to repay that amount along with the interest amount, in the form of monthly mortgage payments. The regular monthly payments that you have to make may sometimes be too costly for you and you may be willing to lower down that amount. Here we discuss about some tips by following which you can reduce the cost of home mortgages.
Make automatic payment system
While you are paying monthly mortgage payments, it is advised that you must set up automatic payment system. Some lenders offer discounts in case you set up automatic payments for your mortgage loan. This actually helps you save some money
Add one extra payment every year
One easy way to clear off the mortgage burden early and reduce the pressure of mortgage payments is to make extra payments every year. The extra payments that you make reduces the principal amount. This does not only reduce the remaining balance but at the same the burden of interest payments also gets reduced.
When credit is not ideal
You may or may not have perfect credit score. Credit score is given by three credit bureaus – Equifax, Experian and TransUnion. If your credit score given by three credit bureaus are 700, 720 and 740, then the lender takes 720, the middle one. If you have relatively less credit score, the mortgage rate for you is kept at higher levels and vice versa. If you have a poor credit score but still willing to get the loan at a favorable rate, you need to find someone else with good credit score to serve the role of a co-signer
Bargain on mortgage fees
There is no uniformity in the mortgage fees charged by the lenders. By bargaining with the lender, you can reduce the fees charged by the lender. This helps in reducing the cost of mortgage loan.
Establish bi-weekly payments mode
You can repay your mortgage loan early by setting up bi-weekly payment systems. There are 52 weeks in a year. It means that in a year, under bi-weekly payment system, you make 26 payments. If each bi-weekly payment amount is half that of the full monthly payment amount, it implies that you make 13 full monthly payments in a year. While in case of monthly mortgage payment mode, you make 12 full monthly payments in a year. In other words, in case of bi-weekly payment system, you make one extra full monthly payment. This actually helps you repay the loan early.
Do away with PMI
If you have made a down payment amount less than 20% of the purchase price of the house, then you are required to pay private mortgage insurance (PMI) to your lender. PMI gives a kind of protection to the lenders against the defaulting borrowers. This PMI increases the cost of the mortgage loan. In order to avoid the burden of PMI, you must try to make at least 20% down payment at the time of the closing of the loan.
If you can follow these basic rules, you will be able to reduce the cost of the mortgage loan and save some money.
===============================================================================================================================================About the Author: Jessica Bennet with her vast experience in the mortgage industry has been associated with the MortgageFit Community as a Mentor. Not only does she participate in the community forums to give her suggestions, but also makes her contributions through different articles on mortgage.
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