Curtail your mortgage expenses and protect your home in 5 ways

Profile Picture
By: Good Nelly
on 16th Aug,2012

Millions of homeowners are desperately trying to reduce their expenditures so that they can free their home from the clutches of the lenders.
Curtail your mortgage expenses and protect your home in 5 ways

Are you thinking about the various ways to curtail your mortgage expenses? You're not the single man on this earth who wants to reduce mortgage expenses and secure the roof above your head. Millions of homeowners are desperately trying to reduce their expenditures so that they can free their home from the clutches of the lenders. Read along to know about 5 sure shot ways to lower your expenses on mortgage.

Ways to slash your mortgage expenses

Check out the 5 ways to save money on your mortgage.

1. Find out a lender who charges lowest interest rate on mortgage

You know that different credit card companies charge different interest rates. Similarly, the mortgage interest rate varies from lender to lender. Your job will be to locate the lender who charges the lowest annual percentage rate on the mortgage loan. Keep it in mind that annual percentage rate involves the loan origination cost plus the normal interest rate.

Go to different lenders and ask the total cost involved in taking out the mortgage. Compare the interest rate and negotiate with the lenders to get a lucrative deal. Strike out a deal which will help you save your hard earned money.

2. Change the terms of the existing mortgage loans

Many people get confused between mortgage modification and refinancing. There is a difference between the 2 things. In mortgage modification, you actually save dollars by modifying the terms and conditions of your loan. However, in refinancing, you actually save money by taking out a new mortgage at low interest rate.

Not everyone can qualify for mortgage modification. This is because you'll have to prove that you're facing financial hardship. You'll have to explain the reason of your financial hardship. It can be due to job loss, high monthly payment amount, pay cut, etc. Otherwise, mortgage lender will not agree to reduce the interest rates or stretch the loan term.

Mortgage modification can potentially help you save thousands of dollars and safeguard your dream abode from short sale or foreclosure. In case, you're short of cash and lagging behind your mortgage, then request the lender to explain you the steps to modify your loan.

3. Evaluate the value of your house correctly

After the housing market crashed in 2007-08, the value of millions of homes has dropped. Analyze the actual value of your home. If the value of your home has fallen significantly, then you can get rid of the much dreaded private mortgage insurance and property tax.

Usually, borrowers are required to purchase private mortgage insurance when they obtain a mortgage for around 80% of the value of the house. If this balance drops below 78% of the value of the house, then the lender has to stop the private mortgage insurance charges.

4. Think about reverse mortgage seriously

You can take advantage of this option only if you're above 62 years. You can leverage your home equity to get monthly, quarterly or annual payments from your lender. You won't have to make any payments to the lender unless you're permanently leaving your home. You can stay in your home as long as you can and reduce your debt burden.

Reverse mortgage is unsuitable for you when you don't intend to stay in the house in the long run. There are some costs involved in a reverse mortgage. If you don't live in the house for long, then the cost will surpass the benefits of reverse mortgage.

5. Refinance your loan only for the correct reasons

Refinancing is a popular mortgage debt relief option wherein homeowners pay off their current loan with a new one. Homeowners resort to refinancing as they are able to secure comparatively lower interest rates and monthly payments. However, this debt relief option is not feasible for everyone.

Homeowners should actually divide the total savings through refinancing by the total cost involved in refinancing. It is better to opt for refinancing only when the savings is more than the total cost.

Last but not the least, there is yet another way to save on your home loan. You can make some additional payments on mortgage. This will enable you get rid of the mortgage debt little early. Try to make at least one extra payment in one month. Find out how it is helping you to save on your mortgage.

Analyze the benefits and drawbacks of making additional mortgage payments with a financial consultant. Ask if you're financially capable to make extra mortgage payments.

No votes yet

Page loaded in 0.260 seconds.