There are numerous ways with which you can save thousands of dollars in interest. Who wouldn't want to amortise their mortgage loans as fast as possible with little interest paid? Here are some tips to reduce your mortgage loan and save on the interest paid.
One obvious tip to save money on interest is simply to make an initial down payment. If you need a mortgage loan for $300,000, try to obtain and retrieve maximum funds from your savings, investments, or from your family. Remember, the lesser the principal, the lower the interest paid on capital. In this case, if you can raise an amount close to $50,000 from external sources, it will save you thousands of dollars by the time the tenure of the mortgage ends by means of interest saved. However as many of us know, coming up with extra cash is usually easier said than done. And then came along Biweekly Mortgage Programs.....
The majority of mortgage loans are provided to borrowers with simple monthly payments. Lenders prefer this type of re-payment schedule, as this can help them maximize their profits.
Here's an example of how a biweekly mortgage payment can help you:
Consider that you want a mortgage loan of $300,000 to buy real estate. According to USA Today the average borrowing cost of a 30-year fixed rate mortgage (excluding fees) is 6.32%. With this interest rate your estimated monthly payment would be $1860.83. While this monthly payment seems small in comparison to $300,000 you would actually pay more than double of what you borrowed over the next 30 years. In fact these monthly payments would amount to whopping $669,898.80 over the duration of the 30year mortgage!
However there is a way to pay off your mortgage in 24.4 years, save $80,779 without the high cost or hassle of refinancing.... No it's not robbing the bank or winning the lottery. This is called a biweekly mortgage payment system (visit equityplus.net to learn more)
With the biweekly payment option; you have the option of making payments every other week instead of once a month. This produces more money toward your principal each year – drastically reducing the interest and time you owe on your mortgage. You are able to set the payments up to coincide with YOUR pay-schedule versus the lenders. In the example above you would owe $1860.83 each month, however on a Biweekly Mortgage Program, you would pay $930.42 every 2 weeks. By making biweekly payments, at the end of the year, your total payment will be 26 half payments, or 13 full payments, which is one more than the actual estimated payment for 12 months.
You could also refinance your mortgage
If you find that the interest rates have dropped since you have taken your loan, you may save money by refinancing your loan. Refinancing is nothing but taking a new mortgage with the latest interest rates and replacing your old loan. Be sure to keep your principle amount the same, as any increase in the mortgage loan amount can further increase your equated payments, and this can never help your cause.
However recently many US citizens have painfully noticed that refinancing a mortgage has many catches, especially if the lending terms happens to be an ARM (adjustable rate mortgage). ARM mortgage interest rates are adjusted to many indexes that are related to the economy. Certain circumstances (such as the fed increasing interest rates) may cause the ARM to increase, leaving you with higher monthly payment.
Besides coming up with extra money for down payments or taking risky choices such as ARMS why not lower your interest with enrolling in a Biweekly Mortgage Payment Program. Visit www.equityplus.net to learn more.
