Taking a Mortgage may seem like a great idea, but paying those high interests can empty your pockets in no time. However, for US residents, the time has changed now as now there are some tips you can try can take advantage tricks that could save them some money on their mortgage interest.
No longer have you had to bear paying high mortgage interests when you have tips to turn things in your favor. There are different things to save money on your mortgage interests, from bi-weekly payments to using a streamlined refinancing structure. Take a look at a few such tricks to save interest money on your mortgage:
1. Maintain A Bi-weekly Repayment
There are many ways to maintain a bi-weekly repayment and retain the full value of your mortgage. The most effective way is to retain one of your payments every two weeks. By doing this, you will be making four equal payments per 12 months and saving more on your mortgage interest. However, increasing the payment frequency doesn’t allow the interest to build for the entire month.
2. Keeping making Extra Mortgage Payments
The second trick you can use is to make extra payments. By making a 25-30% loan amount, you will be saving more on your interest. This way, the money will get applied for the whole month, thus saving on the interest. If you have cash in your hand, you can make payments now and then. You can reduce the monthly interest rates by adding money to the principle.
3. Using Streamline Refinancing Structure
The third trick to save money on your mortgage interest is using a streamlined refinancing structure. Depending upon your lender, they may offer you help with this option which will help you obtain lower rate loans with pay-off schedules that match your budget and needs. Also, there are many other advantages like avoiding pre-payment penalties and fixed rates after five years of possession.
4. Avoid Private Mortgage Insurance (PMI)
PMI is a high-cost add-on that comes with your lower mortgage amount. It is insurance that the homeowner pays against default by the lender, thus lowering the value of your home. You can avoid paying PMI by using a higher down payment and looking for lenders that offer 0% down, refinance loans with subprime debt options and look for loan alternatives like FHA loans or VA loans.
5. Recasting/Re-amortization Mortgage
The last trick is recasting/re-amortization mortgage. This is a fixed-rate or adjustable-rate loan with a shorter duration than the original one. This helps you pay off your mortgage in half the time. In this, you can save interest money on your mortgage and lower the period to get out of debt.
These things are simple and perfect for those who can’t afford to pay huge interest amounts. These tricks can lower your interest money on any type of mortgage. Additionally, you will be able to settle a mortgage faster by cutting down on huge interest costs.