Slashing Off Your Monthly Mortgage Installments - Smart Moves To Take
The Mary Ellen Vanaken Team of Keller Williams Realty 678-665-2887
When you take out a home mortgage loan, you actually commit to the lender to make decades of payments to repay the entire loan amount with the interest rates and the insurance and taxes. The industry term which is used to describe the payments is PITI or the principal, the interest payments, the taxes and the insurance. According to the thumb rule, the PITI shouldn't exceed 28% of your monthly income but there are many who are struggling with their monthly mortgage payments as they find it to be too high in accordance with what they make in a month. Are there any ways in which you can lower the monthly mortgage payments and ease off the burden of making sky-high payments towards your mortgage loan? You may read on the concerns of this article to check out the ways in which you can lower the mortgage loan installments.
- Add a single extra payment every year: Is it possible to make a single extra payment every year? The experts suggest that this is perhaps the best way in which you can save your dollars on your mortgage payments. When you save enough money and live a life within your means to make some extra payments, these will automatically be applied towards the principal amount and not towards the interest rate. By this added payment, not only the will the remaining outstanding principal balance drop, you won’t even have to pay the interest rate every month on the principal for the rest of the term of the loan.
- Eliminate your PMI: When you don’t pay down exactly 20% of the term of the loan, you qualify for paying the PMIs or the Private Mortgage Insurance payments. Did you know that you could easily petition your lender to eliminate this insurance payments as soon as the loan balance falls below 80% of the appraised value of the home? This will only happen when the value of your home has gone up or you've taken some steps to repay your principal amount. Although you may require a new appraisal, but it can certainly help you save a portion of your dollars.
- Get a loan with a longer repayment term: If you’re someone who is saddled with the hefty monthly payments with a 15 year or 20 year term mortgage loan, why don’t you get yourself a 30 year term mortgage loan to cut down the installments? Yes, of course the interest rates may rise due to this, but the good news is that you will still have the chance to choose making additional payments whenever you have extra funds at your disposal. The extra payments can help reduce the principal balance of the loan without obligating you to make larger monthly payments.
- Refinance the mortgage loan: Last but not the least, you can refinance your mortgage loan during a time when the mortgage interest rates are pretty lower than what you are paying. It is possible to alter the terms and conditions of your mortgage loan through a refinance. You can lower the interest rate, extend the repayment term of the loan, alter the kind of loan (change it from an ARM to a fixed rate mortgage) in order to lower the monthly payments. Just make sure you calculate the mortgage payments so as to save enough dollars.
Therefore,
when you feel that the hefty mortgage payments are like a burden on
your shoulders, you can take the above mentioned steps. You may even
take help of a professional who will help you locate the best loan in
the market and advise you about the steps that you might need to
take.
This article has been contributed by Sam Stokdale - Mortgagefit
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