Do you think that you're spending a huge percentage of your income on mortgage payments? Do you fret every month after sending payments to your mortgage lender? Have you ever tried to find out the reasons why you pay more to your mortgage lender? If not, then check out the probable reasons why you're paying a huge amount of money to your mortgage lender every month.
1. You are not interested in refinancing:
Do you think that your lender is charging a moderate interest rate? It might be the case. However, as the mortgage interest rates are very low, so refinancing can be a wise move right now. It will help you lower your mortgage expenses.
Refinancing gives you an option to swap your current mortgage loan with a completely new one that has better terms and conditions. These new terms and conditions may allow you to cut down your interest rate. This in turn will assist you to reduce your monthly payments. Moreover, the new loan may be offered to you for a shorter span of time. This means you'll be able to pay off the mortgage debt early.
2. You have opted for adjustable-rate mortgage:
Adjustable-rate mortgage seems to be a lucrative option initially. However, keep it in mind that your financial life may turn into a disaster once the interest rate is adjusted.
The interest rate on an adjustable-rate mortgage changes from time to time. This means that the interest rate on a mortgage may increase or decrease at any point of time. If the interest rate is high, you'll have to hand-over a generous amount to the mortgage lender. Alternatively, in a fixed-rate mortgage, you'll have to pay the same amount to mortgage lender every month.
The current mortgage rate is low. So, adjustable-rate mortgage doesn't seem to be risky to anyone. However, keep it in mind that your mortgage loan is most probably a 30-year commitment. So, you may wish to plan for that number of years.
Some mortgage experts feel that mortgage interest rates will move up in future. So, they opine that people should opt for fixed-rate mortgage now.
3. You have opted for 30-year mortgage loan:
Do you think that a 30-year mortgage loan is the only available option for you? If yes, then you're completely wrong. You can cut down the mortgage term by half. You may think that your monthly mortgage payment amount will increase once you opt for a 15-year mortgage loan. However, this is not true. The actual fact is you can potentially save money by opting for this option.
The interest rate on a 15-year mortgage loan is lower than that of a 30-year loan. Moreover, you'll pay off the principal amount in much less time. This option will actually help you reduce the time period during which the interest will accrue.
There is yet another reason why you're sending a huge check amount your mortgage lender. You may have taken out a second mortgage to pay down your debts. This means you've to make payments on both the mortgages. If you really want to save money, then you can think about consolidating both the mortgages into a single loan. This will enable you reduce your total interest rate.