When we consider new ways to save on our current monthly budgets, many of us start to think about things in our homes that we can save on – groceries, utilities, etc. However, we rarely think about ways in which our home itself can save us money because we usually assume that means downsizing. While downsizing can definitely save you dramatically each month, it isn’t always a possibility for all homeowners.
But if you would still like to reduce the amount of money you are spending on your home each month, consider looking for ways to reduce your mortgage. A few easy ways include:
Extend the Life of the Loan
If you are simply looking for lower monthly payments, consider asking your lender to extend the life of your loan. By switching from a 10 to 15 year or 15 to 30 year mortgage, you can dramatically reduce your monthly payments to make them more affordable. Most lenders, ranging from government programs to Aurora Bank home loans, will be happy to extend your loan as long as your credit is still good and you will be able to make your payments.
Get Rid of PMI
If you have paid down your mortgage over the years, you may be able to get rid of your private mortgage insurance. In order to do so, you must simply owe no more than 80 percent of the original loan to the lender. So if you bought a home for $200,000, and have paid off $40,000, then you should be able to get rid of your monthly PMI payment.
Interest rates are historically low, and if you bought when the rates were high, now may be the time to head on down to your lender and ask about refinancing your current mortgage. With a mortgage refinance, you essentially are able to put the entire mortgage loan under a better, lower rate. However, beware of this option as high closing costs and having to pay interest on already accrued interest may not make this option as cost effective for some.
We would all like to save money, and choosing to give your mortgage a second look can help save you hundreds, if not thousands, of dollars a year. So if you are looking for a few easy ways to put some money back in your pocket, call your lender today to ask about your options.
This was a guest post from Nancy Evans. Please see my disclosure notice here.