Most of us can’t afford to pay for a new house in cash. So, we borrow a large amount in order to purchase that beautiful house we’ve been eyeing. This loan is known as mortgage, and the collateral here is the property bought. In case we fall behind mortgage payments, there’s a huge possibility that we will lose our home. When our home is foreclosed, it’s not just about losing a piece of property. It’s also about losing a place that we dearly love.
It is, therefore, very important to be a responsible homeowner, and this responsibility involves paying the mortgage on time. Apart from ensuring that you’re making timely payments, there are actually a number of ways that you can reduce mortgage fees. Here are some ideas that you should seriously consider.
1. Opt for shorter loan terms.
In general, when the loan term is longer, a large amount of your money goes to paying the interest. So, a shorter loan term will allow you to save money. In this case, even if your monthly fees are higher, the total cost of your loan is reduced. Furthermore, you’ll also be able to finish paying your mortgage earlier.
2. Overpay mortgage when possible.
If you get a hefty bonus, don’t go shopping immediately. Instead, use the extra income to make extra payments so that you’re overall loan balance is reduced. Remember that mortgage interest rates are normally calculated on a daily basis. When your total balance is reduced, this means that your interest will also be lower. Another benefit of overpaying is that you also avoid being penalized for late payments. Furthermore, when you overpay your mortgage, you will still be able to access your money in case you need it.
3. Pay mortgage fees on time to avoid costly penalties.
Being a good payer has so many benefits. Obviously, if you pay your fees on time, you avoid getting all sorts of penalties. In case you miss 3 successive mortgage payment deadlines, you risk foreclosure. When this happens, you should talk to your lender about your financial problems so that he would be able to help you out. But keep in mind that your lender still has the right to impose late fees or penalties, and other finance charges, as well as legal fees.
4. Always keep in touch with your lender.
Yes, lenders may have the power to take your home away; however, these people also have the power to help you deal with your mortgage payments. By ensuring that you and your lender are regularly communicating, you avoid any ill feelings and miscommunications that could create more problems for you. In addition, you could renegotiate mortgage terms with your lender or ask him for advice about what’s the best option considering your current financial situation.
5. Look into government programs to reduce mortgage payments.
There are certain government programs that benefit those who are having trouble with their mortgage payments. An example is the program “Making Home Affordable Plan.” Get in touch with your lender and inquire if he knows of any government programs. Don’t forget to ask if you’re qualified or not.
Claire Campbell is a freelance blogger who also experienced some financial challenges when she recently bought her new house. She writes about real estate issues, home improvement, and she also blogs about new homes Airway Heights Washington.