Four Ways To Save Money On Your California Home Mortgage
Keywords: California Real Estate, Mortgage, Mortgage Fees,
You are already probably paying hundreds of thousands of dollars for a home in California or more. So you certainly do not want to spend unnecessary additional money on closing costs, lender fees, higher interest rates, and other hidden costs. Ways to save on your home mortgage are not immediately obvious, especially when you are not familiar with all the ways lenders can tack on additional costs to the total amount of the mortgage. Use these tips for ways to save money on your home mortgage.
Make sure you are choosing the right type of home mortgage for your situation. When it comes to the total cost over the duration of the loan, the 30 year fixed rate home mortgage is the most expensive, with one exception. If you plan to live in your home for the length of the loan, it is the best home mortgage. As you shop for mortgages, take into account how long you plan to be in your home. Let that length of time determine the type of loan you get. As a general rule of thumb for shorter periods of time, choose an adjustable rate loan, and for longer ones choose a fixed rate.
Try to negotiate with your lender. There is absolutely nothing wrong with asking your lender for a better interest rate or to eliminate some of the fees associated with your home loan. Consider the fees for which the lender makes no money: appraisal, inspection fees, processing fee, title fees, private mortgage insurance, and credit report fees. Anything outside of these fees is fair game to be negotiated with the lender. Do not hesitate to ask your lender to take away some of the unnecessary fees.
Make payments more frequently. If you get paid on a biweekly basis, consider making biweekly home mortgage payments. Each time you make an extra payment, even if it is just one, it shortens the life of your loan. By making two payments a month instead of one, it takes you a little over 23 years to repay a 30 year fixed rate mortgage. Any extra payments you make toward your home mortgage go toward the principal of the loan. So, the balance of the principal, rather than the interest, is reduced by any extra money you pay. When you do this, you can reduce your home mortgage payment dramatically as stated above. Before you make extra payments, make sure your agreement did not include a charge for early repayment.
Try to avoid paying private mortgage insurance. You are required to pay PMI when you make a down payment less than 20 percent of the amount of the loan. The amount you pay in PMI could be used to make extra home mortgage payments or invested in a high yield investment account. If you are already paying PMI, watch your equity closely and drop the insurance once you have 20 percent equity in your home.
There is no sense in paying extra money in interest and other home mortgage costs unless you absolutely must. By using just one or two of these methods you can save thousands or even tens of thousands of dollars in the total cost of your mortgage. When you take steps to reduce your costs, make sure you are not decreasing one cost and increasing another simultaneously.
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