These days home ownership can be more expensive than ever, while at the same time, the economic pinch or stagnant wages and the persistent rise of inflation puts a strain on one’s ability to save and make high house payments.
But there are ways to make homeownership more affordable. By using some basic strategies and tips, you can save money and secure yourself a mortgage quicker as well as pay it down quicker.
1. Get Professional (Free) Mortgage Counseling
Given the complexity of the documentation requirements to get a mortgage and the diversity of options available today, all but the most experienced do need to get some expert advice on what kind of mortgage to take out. Free mortgage counseling groups like https://onqfinancial.com/ can also help you get 100% financing, help you qualify for low or no down payments, and get you into other money-saving programs.
2. Get the House in Question Reassessed
In many cases, a home may have been over-assessed in value for taxation purposes. And getting the property tax bill lowered through a re-assessment can also lower your monthly house payment bill. It’s not that taxes are part of the house payment (they aren’t), but the money is often put in escrow to cover property taxes in case of a default (and that ups your monthly payments).
3. Eliminate PMI
What is PMI? It stands for private mortgage insurance and it can raise your monthly mortgage payments by between a half and a full percentage point. That may not seem like much, but it adds up over a 30 year mortgage. By putting a full 20% down, or finding an 80-10-10 program where 10% is paid for on a second mortgage, you can avoid carrying a PMI coverage. Alternatively, you can simply find cheaper PMI policies, which a good mortgage counseling group can also help you with.
4. Pay Extra Ahead of Time
When it comes to paying down your mortgage, making extra or extra-large payments pays off big dividends long-term. You not only down the principle quicker, but you reduce how much interest you ultimately pay. And the “beautiful thing” about it is, you keep on saving every year on the extra money you paid off earlier, because the full amount you get ahead no longer bears interest, year after year after year.
5. Utilize a Zero-interest Credit Card Rate
Do you get credit card offers from time to time with 0% interest introductory rates? Here’s how you can use them to save money on your mortgage. Use credit card convenience checks to pay a year’s worth of extra payments (as mentioned in number 4 above) in one lump sum. Then, from month to month, save up the money to pay off the credit card but keep it in an interest-bearing savings account. Before your intro rate period ends, pay the credit card off all at once.
Even after a convenience check fee, you will save extra interest by making your extra payments on the mortgage all at once instead of bit by bit throughout the year. Plus, add on 1% or so earnings from the savings account. A person could easily save $100 to $200 per year using this method.