It can be a challenging task to pay your mortgage loan speedily. This is because there are things that will block your way of payment. Paying your mortgage days before its due date will not make you pay less interest. If you pay your loan late but still in the two-week grace period, you will still incur the same interest. Loan payments on most mortgages are calculated at one time as if they were paid on the first day of the month. Here are ways of paying your mortgage faster.
Bear in mind to pay the mortgage just once in 30 days. The purpose is to use the payment receipt every time you pay the loan at an amount higher than the minimum disbursement you make.
When paying your mortgage, show the bank your receipt and tell the collecting agent that the extra amounts shall be applied to the principal. If you fail to do this, the bank would hold the extra funds and use it for your next payment. Your mortgage balance shall continuously accumulate interest thus it seems like you did not make the added principal payment.
If you make your payment via the internet, do not pay more than the minimum payment. Keep the payment receipt and then pay the principal with your extra payment. Make a separate check for your additional payment and send this via mail to the bank. This will lower the amount of your principal. Again make the bank understand that this amount is for the principal as they may hold these funds and add it to your monthly payments.
Another way to pay off your mortgage quickly is to refinance your mortgage to minimize your loan term. This is ideal when interest rates are declining. This is especially helpful in an environment where interest rates are falling. Go online and look for ways to refinancing a mortgage. If you refinance, know the closing fees and costs involved in this process.
If you do not want to refinance your mortgage, you can devise a plan that would make you pay extra on your loan’s principal amount. This will minimize the time it would take in paying your loan. This requires both budgeting and careful planning. You will have to determine the amount you will shell out as an extra. This can be as small as $25 per month.
If possible, pay additional lump sum remunerations now and then to pay off your mortgage loan faster. Try to raise funds such as having a garage sale, working overtime, getting sideline jobs, selling things you do not need online at auction sites, or recycling aluminum cans. Find ways to earn extra income to pay off your loan’s principal amount.
You will need to sacrifice a lot of things in the present to pay off your mortgage loan quickly. However, it would be rewarding to be relieved of any more payments in the future. With these tips, you would be loan-free later on.
The Costs You Pay For Your Mortgages
A mortgage is a legal agreement wherein the debtor transfers the interest of an unsettled duty to the creditor. It includes the principal amount plus the monthly interest. Therefore, before entering a mortgage deal, evaluate yourself if you can pay your monthly obligations during the duration of your loan.
Before getting a mortgage, know everything about the charges that you need to pay. Always ask your lender about the total amount repayable. This will save you from paying hidden charges that you are not aware of because you were so persistent in closing the deal. Here is a list to guide you on what to expect in mortgages:
The Down Payment:
The down payment usually requires a minimum of 5% up to a maximum of 20% of the property’s purchase price. However, the creditor may not ask you for any down payment if you acquire an FHA or a VA loan. The FHA or the Federal Housing Assistance loan aims to help low-income Americans to obtain a home. The same policy is applied with the VA loan or the Veterans Affairs loan but they only assist American veterans and their spouses.
Before paying the initial amount, ask your creditor about your options regarding the collection of your down payment. If you are low in budget, request for a lower initial cost. However, a minimal down payment means a higher monthly obligation. But if you have enough cash to pay for the 20% down payment, you can also do so. This will not only eliminate mortgage insurance but will also lower your monthly dues.
The Closing Cost:
The closing cost is determined just before closing the deal. Be sure to ask for a GFE or a Good faith estimate wherein the amounts to be paid are itemized in the list. A GFE usually includes:
è Items payable in connection with loan
è Items required to be paid in advance
è Reserves deposited by the lender
è Title charges
è Government recording and transfer charges
è Additional settlement charges
The subtotal of all these amounts plus the down payment is equal to the closing cost of the loan.
In some instances, the lender pays for a part of the whole closing cost provided that you repay the amount to them with an interest.
The Application Fee:
The application fee is a fixed rate or a percentage of the loan applied for. It may range from $25 to $100 or more as required by the lending company. Some may ask you to pay the amount upon submission of your form while others may collect it after the approval of your application.
The application fee is used in the processing of your loan request. It is pure profit for the bond originator, also known as a mortgage originator because they need to dedicate time in preparing your application for approval.
The Mortgage Rage Lock Fee:
Since the rates and interests may vary from time to time, many lenders offer the mortgage rage lock with a corresponding fee. A mortgage rate lock is an agreement wherein the lender freezes the interest at a given number of days. Mortgage companies usually give a 60 days period upon submission of the loan request. Therefore, no matter how high the interest shoots up during the closing, you are only required to pay the amount from the start of the lock-in period.
The Appraisal and Inspection:
Before a lending company approves your application for a loan, they will conduct an appraisal of your property. This way, they will be able to assess if your property can sum up to the loan you apply for. Together with the appraisal, they will also conduct an inspection. This inspection will evaluate the works that are to do once you won’t be able to settle your obligations.
Things You Need to Know About Mortgage Closing Costs
The mortgage process is not a simple one. That’s why it requires the help of a professional – a team of professionals, to be exact. Not only will you have a mortgage lender, but you will also have a title company (or real estate attorney), possibly a real estate agent, and most likely a mortgage broker. All of these entities will make money off of the transaction, and that money generally comes out of your pocket at the closing table. Do all of those numbers have your head spinning? Here are five things you need to know about mortgage closing costs:
What are closing costs? When you purchase a home, three factors contribute to the overall amount of money you must come up with to seal the deal: down payment, earnest money, and closing costs. The earnest money amount is what you came up with out of pocket to initially take the house off the market (usually in the form of a deposit with a real estate agent). The down payment is what the lender requires of you, upfront, to obtain a loan to cover the rest of the cost of the home. The closing costs are everything else and include things like mortgage origination fees, lender fees, points, and any other fees associated with closing the loan.
What to expect. Closing costs generally average between three and four percent of the mortgage amount. Anything too far over that is excessive, and you need to figure out why.
Negotiable closing costs. Most closing costs are not set in stone. The origination fee, points, and even sometimes the lender fees, can be negotiated, and doing so can save you literally thousands.
Before the closing. How can you make sure that you know exactly what your closing costs are, and how they will be allotted BEFORE you sit down at the closing table? Make sure you get a comprehensive and detailed good faith estimate (GFE) from either your title agent or mortgage broker. Go over every single charge on your GFE with a fine-tooth comb, as the GFE breaks down every part of the financial transaction associated with purchasing a home.
Duplications. Because so many people are involved in the closing transaction, it’s possible that someone could make a mistake. Duplications (the same charge more than once, listed in different places on the GFE) are a common mistake that can cost you a lot of money if you don’t catch them.
Purchasing a home can be a scary process, especially if you don’t know what to expect. Arm yourself with the information that could save you potentially thousands of dollars by putting these tips to memory before you commit to a mortgage.
Tips to Lower Your Mortgage Bill
For most prospective homeowners, buying a home means borrowing a large sum of money. That loan is typically referred to as a mortgage. No matter which term (20, 25, 30, or 40 years) you obtain when you get your mortgage, you are going to have a monthly payment to make. It’s important to try and get that monthly payment as low as possible to minimize the possibility of facing foreclosure and to maintain a certain amount of discretionary cash to spend each month. A few strategies do exist for lowering that monthly payment, so read on!
1. Shop Around
Perhaps the most important step is to shop around for the least points and the best interest rates. While the difference is going to be small, lenders typically vary either in the number of points that they charge or in the interest rate itself. It’s important to compare the APRs (annual percentage rates), rather than the interest rate itself, of different mortgages to determine which one has the lowest annual cost.
2. Maximize Down
Save up as much money as possible for the down payment, since it will decrease the amount of money that you need to borrow. The less money you borrow, the lower your monthly mortgage payment is going to be each month.
3. Settlement Costs
While many sellers balk at a request to cover additional fees at settlement, motivated sellers often agree to pay something extra. It doesn’t cost anything to ask, and it could lower your overall expense if you intend to roll settlement costs into your mortgage.
4. Pay Up Front
Save up the money you need to cover the fees at settlement rather than rolling them into your mortgage. Obviously, you’ll need to figure this out ahead of time before you decide how much money you need to borrow. You don’t need to know the exact amount before you make your decision, and your real estate agent should give you an estimate of the costs to help you decide.
5. Shop Around Again
Since you are borrowing money, you are going to be required to obtain homeowner’s insurance. Most mortgage companies require their borrowers to pay a monthly allotment to the lender to ensure that the money is available when the bill comes due. The higher this insurance bill is, the higher your monthly payments are going to be. Therefore, it is in your best interest to shop around for the lowest premium.
Buying a home is most likely the largest expense that you are ever going to have. Searching for ways to make it less expensive is important, especially in an uncertain economy. Use these tips, as well as any others that you come across, to lower your monthly mortgage payments as much as possible before they actually begin.
Paying Your Mortgage In Half The Time – Tips And Tricks
For many of us who waited to purchase a home until we were more settled, we are faced with the idea that a 30-year mortgage could mean making a house payment with our retirement checks. Few of us are looking forward to that idea. There are ways, however, to pay your mortgage off early. All of these assume that you do not have a prepayment penalty. Make sure you ask your mortgage company before you pay your mortgage off early.
One Extra Payment
For some people, a 30-year mortgage gives them the leeway when times are tough to pay a smaller amount than you would with a 15-year mortgage. One way to pay your mortgage off early is to divide your monthly payment by 12 and pay that amount toward the principal each month. By making an extra payment a year, you can shave approximately eight years off your mortgage payments.
Get a copy of your amortization schedule from your mortgage company. It will show you the principal and interest payments for EVERY scheduled payment for the life of your mortgage loan. Be prepared if you have a 30-year mortgage; there are a lot of pages!
When you get ready to make your house payment prepare two checks — or schedule two online payments. The first check you will write will be for the principal and interest payment of your scheduled payment. The second check will be for the principal of the next payment. That’s right. Just the principal. Make sure that you indicate that on the payment and make sure you keep proper documentation, just in case.
So each month you will pay one full house payment and one principal-only payment. With this schedule, should you be able to keep at it, you can pay your 30-year mortgage in approximately 15 years.
With interest rates the way they are now, for some it may be just as wise to look into refinancing your 30-year mortgage to a 15-year mortgage. Remember that you will have all the associated closing and other settlement costs that are associated with any real estate closing.
For some, there are not enough savings each month to warrant the expense at the closing table and they opt with the accelerated payment schedule. Weigh the costs and benefits associated with all options and talk it over with your financial planner if you have questions and are interested in the specifics for your personal situation.
A word of caution though; there are many scams and so-called mortgage acceleration software programs that are touted as being necessary to accomplish this task. Don’t fall for them or you could very well end up losing your house. Be disciplined enough – or work with your trusted banker or financial planner- to determine what your best course of action is and follow through. Amortization schedules for your loan are easy to come by and provide you with most of the information you will need to begin prepaying your mortgage.