House prices are obviously higher today than many years ago. But even with this fact, people seem to be pumped up to buy houses — and it’s likely because of the comfort and benefit of home ownership. Along with the rise in home prices, the number of potential buyers increased, as well.
While it seems that the increase means more buyers could afford a home of their own, it’s no secret that mortgage is not cheap. Experts say you can do something to save on mortgage costs as you enter this new responsibility. Here’s how you can cut down on mortgage expenses:
How much down payment can you afford?
It is important to assess the total amount of money you can give as down payment. Ideally, your initial payment must be as high as you can make it so that you could reach a relatively lower monthly due. Not everyone can afford a huge amount. So, compute the largest amount you can afford for the down payment and determine whether you could commit to the monthly repayments. If you can afford to pay regularly with no potential trouble, then you can proceed.
How long is the amortization period?
Another factor you shouldn’t set aside is the amortization period of your property. Keep in mind that this is where most mortgage companies charge interest on loans. If you have a longer repayment period, you’re likely paying a higher rate. One piece of advice for this case is to keep your amortization period at a minimum to help trim down your annual expenses.
Do you really need PMI?
Private mortgage insurance (PMI) only makes sense if you borrow more than 80% of your home’s value. PMI is an added 0.5% to 1% fee to protect the mortgage if the debtor suddenly discontinues the payment. However, if you make a down payment of 20% or lower, you can get rid of it. This could save you thousands of dollars in annual fees just to cover for it. Along with that, mortgage lenders in Tempe, such as Primary Residential Mortgage, Inc., agree that if you pay your obligations on time, you’ll be rewarded for it, so might as well keep it updated.
These are three of the many conditions you may consider when applying for a mortgage. By understanding the processes and taking advantage of them, you can gain more savings before, during, and after your contract ends.