Ways To Save Money On Your Mortgage

Pile of coins

See if you can save some coin on your next home loan!

For many home owners, mortgage payments are their largest monthly expense. Fortunately, there are ways to decrease your monthly payment and pay off your loan faster. Keep in mind, these are merely suggestions and may not work for every homeowner. Talk to your mortgage consultant or financial adviser before committing to any of these practices.

For illustrative purposes, let’s use this imaginary 30 year fixed rate mortgage as an example:

Mortgage amount: $200,000
Term: 30 years
Rate: Fixed, 5%
Estimated monthly P & I payment: $1,073.64

Make one extra payment a year

If you are able, make one additional, full mortgage payment a year. Be sure this extra payment is going toward your principal¬† balance, not your interest. Depending on your loan terms, you may need to request that the money be put toward principal. [Read more…]

PITI: The 4 Components of a Mortgage Payment

North Carolina Beach Houses

Learn about what your mortgage professional is talking about when he or she mentions PITI

As you may know, when you make a mortgage payment, you aren’t just paying one big chunk toward one balance. In a typical mortgage arrangement, your payment will be divided into four parts that will go toward four different debts. Principal, Interest, Taxes and Insurance are the four main components of a mortgage payment. Whenever you make a monthly payment, your money is divided among these four balances.

Here’s a simple look at how your monthly payment is divided among the four components.

  • Principal: The original amount of the loan. If you buy a house for $150,000 and you put $15,000 down, then the principal of your loan would be $135,000. Very little of your early payments will go toward paying off the principal.
  • Interest: The total amount of interest that will be applied to the principal. Using the same example above, say you take out a loan for $135,000 at a 4 percent interest rate. Four percent of $135,000 comes to $54,00, which will be added to your overall mortgage balance. Most of your early payments will go toward interest.
  • Taxes: Your obligatory payments for city, county or property taxes. Many homeowners pay their property tax obligations as part of their monthly mortgage payments and their mortgage servicer puts the amounts into an escrow account until the bills are due. This is simpler for home owners who pay the same amount each month rather than having to come up with enough money to cover a large tax bill once a year. Mortgage lenders also prefer it because they can be certain the money is there to pay the taxes due. If the homeowner failed to pay his or her taxes a lien could be put on the home jeopardizing the mortgage lender’s interest.
  • Insurance: Payment for homeowner’s insurance to cover damage to your home or property. Most insurance policies are not all-inclusive, so be sure you understand exactly what is covered in your policy. Homeowners insurance (and any other applicable policies such as flood insurance) is often paid for as part of the payment and put into an escrow account just like the property tax payment. If you purchased a home with less than 20% down, you may be required to pay private mortgage insurance (PMI). This protects the lender if you should default on your loan.

What are the Fastest Growing Cities?

Thinking of making a move? Check out these fast growing communities.

Thinking of making a move? Check out these fast growing communities.

Not looking forward to another winter in Buffalo or a summer in Phoenix? Stuck in rut at your job and considering a change of scenery? Maybe a fresh start is in order. CNNMoney.com put together a nice slideshow of the fastest growing cities in the United States and we did a little bit of legwork to help provide you with some resources on these booming metropolitan areas.

City: Greeley, Colorado

  • Population has grown from 180,826 people in 2000 to 252,825 in 2010.
  • CNNMoney.com’s notes – Says that there is a lot of jobs for unskilled laborers in meat-packing plants….hmm…on second thought.
  • Greeley’s City Site
City: Austin, Texas
City: Bend, Oregon
  • Population has grown from 115,367 people in 2000 to 157,733 in 2010.
  • CNNMoney.com’s notes – “Bend is blessed with lovely climate, with little rain…” Who knew? Jobs available in health care and technical services.
  • VisitBend.com
City: Myrtle Beach
  • Population has grown from 196,629 people in 2000 to 269,291 in 2010. [Read more…]
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