Title:
Mortgage Costs
and How to Reduce Them
Word Count:
470
Summary:
Over the life of
your mortgage you may pay nearly three times the price of your home, paying
most of the extra in interest costs.
Here are some ways to save.
Keywords:
home equity loan,
line of credit, second mortgage, tax deductible, debt consolidation, home
appraisal, debt consolidation, reverse mortgage, real estate investment, credit
repair
Article Body:
Few people will
ever pay more for anything than they do for their home. The prices of housing are continually
escalating; the median price of a house in the United States is now more than
$215,000. Adding to the expense is the
mortgage interest. Over the life of the
loan, most homeowners will pay approximately twice the cost of the house in
interest alone.
Taking interest into account, the cost of the average American house now costs
more than $500,000. But while everyone
wants to own a house, few people relish the though of paying nearly one third
of a million dollars in interest to their lender. And yet, many people do, seemingly unaware
that there are things they can do to reduce the cost of buying a house.
Here are some things that you can do that may help reduce the total cost of
buying a home:
Eliminate your private mortgage insurance (PMI) - If you are making a down
payment of less than 20%, your lender will require that you pay private
mortgage insurance every month. This
protects the lender against default, but it doesn't help you one bit. If the value of your house increases or if
you pay down a portion of your mortgage, your equity may exceed 20% of the
home's value. In that case, you can ask
your lender to drop the PMI. The lender
won't automatically do it; you must ask.
You will also need to submit the results of a formal appraisal to prove
the home's value. Should your lender
drop your PMI, you can simply add the amount you were paying to your mortgage
payment each month. The extra sum will
help reduce your interest costs and will help you pay off your loan
sooner.
Add to your payment - You can pay more than the listed amount each month. Any extra you add to your payment should be
applied to your loan principal, which will contribute to paying off your loan
sooner. Every little bit helps; even $10 or $20 per month would probably save a
few thousand dollars over the life of the mortgage.
Refinance your loan - If interest rates take a drop to one or two points below
the interest rate on your loan, it would probably be worthwhile to refinance. The costs of refinancing can usually be
recovered through lower payments within a few years. Depending on the interest
rate and the size of your loan, you could save tens of thousands of dollars
over the life of your mortgage.
These are but a few of the ways that you can reduce the cost of buying a
home. While there isn't much you can do
about the price of the house itself, you can certainly do a number of things to
reduce the amount that you pay in interest over the years. Every penny counts.