If you’re like most people, your mortgage expense is probably your highest monthly bill. Paying it off means that you only have to pay your property taxes, insurance, and maintenance costs in order to have a roof over your head. Unfortunately, the house is also the most common thing that people with no steady income tend to mess up. Buying a home that’s too expensive, remortgaging the property in order to keep a business afloat in rough times, or even using the house to pay off high interest loans can lead to losing a property.
For many people, making their mortgage payment is their top priority every month. Because of this, it makes sense to lower the cost of this monthly payment. In order to do this, you have to reduce one of the four parts of your mortgage; the interest, the principal, the taxes, or the insurance.
Save on a mortgage
Taxes and insurance are paid into an escrow account every month until you have completely paid off your mortgage. In some cases, the mortgage company will allow you to pay for these things on your own, but you will have to show years’ on time payments. Because failure to pay your taxes can result in the government foreclosing on your home, many mortgage companies will insist on keeping up the escrow account.
If you have to have an escrow account, any amount that you save on your taxes and property taxes will not come back to you until the next fiscal year. Nonetheless, it is possible to save hundreds of dollars. Start by reviewing your tax assessment for errors. If you find false information, file an appeal with your tax collector.
Next, it’s time to consider ways to lower your principal and interest costs. One of the easiest ways to reduce your mortgage costs is to refinance your home. In order to qualify, you will need to have significant equity in the property. As you save more money, it’s usually a good idea to work towards paying off your mortgage early.
On the other hand, if you just can't afford the house anymore, it might be time to give it back to the bank. Voluntary foreclosure has become more popular in recent years as more and more people find that they need to get out of overpriced housing.
Finally, you might need to use your home as collateral for a loan. Taking out a second mortgage or an equity loan can be a good idea in some cases, but it is important to understand how these loans work and what you are risking.