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Refinancing your mortgage is a great way to lower that monthly expense and save money. Rates are lower now than ever before, so this is a great time to reduce the interest rate. However, you can save even more by making smart decisions about the mortgage. Here are a few things to watch for when you start talking to different finance companies about your mortgage.
Talk to the County AuditorIf your property taxes are escrowed, then they can make a big difference in your mortgage payment every month. With many property values falling in recent years, it is possible that your home is being taxed at the incorrect level. If you believe that your property value has fallen, but your taxes have not changed, then you can talk to your assessor about the assessment amount. It will lower your annual taxes and your monthly payment.
Look for a No Cost LoanRefinancing your mortgage can be expensive, but you donít have to pay the fees. When you get a no cost loan, the lender will cover the closing costs for you. In exchange for waiving closing costs, they will charge you a higher interest rate. This loan can be the right choice if you arenít going to stay in the house for the rest of your life but still want a lower payment in the short term.
The Extra Payment OptionIf you are paid every other week, then you should talk to your finance company about paying your mortgage every other week. Bi-weekly payments can shave years and thousands of dollars off the total note. You only pay half of the mortgage payment each time, but you will wind up making an extra full payment over the course of the year. Not all banks offer this, and some charge extra for the option. Before you make a final decision, find out how your particular bank handles bi-weekly payments.
Avoid PMIPrivate mortgage insurance can add quite a bit of money to your payment every month. Traditionally charged if you are financing more than 80 percent of the value of your home, you want to eliminate it as soon as possible. Watch your balance on the mortgage, and call for a review as soon as the principal drops below that 80 percent threshold.
Private mortgage insurance can add quite a bit of money to your payment every month. Traditionally charged if you are financing more than 80 percent of the value of your home, you want to eliminate it as soon as possible. Watch your balance on the mortgage, and call for a review as soon as the principal drops below that 80 percent threshold.
Ask for a RecastIf you pay extra towards your principal every month, then you are well on your way towards paying the loan off faster. When times get tough, you can ask the mortgage company to recast the loan and lower your payments for the remaining term. This only works if you have been paying extra, but it can help you avoid the expenses of a new loan completely.
There is more to refinancing than just lowering your interest amount. While this will help you save money, you also want to make sure that you are saving on loan fees. Have PMI eliminated as soon as possible to save money, and consider bi-weekly payments to lower the mortgage faster.
Jessica Hill is a guest writer for ppiclaims.uk.com where you can find information on mortgages, interest rates and special financing savings.
Photo credit: House by Tax Credits.net on Flickr
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