Buying a home poses one of the biggest financial commitments to most individuals. Your mortgage payments comprise the largest component of your monthly bills. Just because you’ve taken on a large mortgage doesn’t mean you’re doomed to live from paycheck to paycheck. Furnishing and rebuilding a new house gives freedom and independence. This can be topped with some smart moves and disciplined money management to keep your house costs down.
How you can save money while paying mortgage? We tackle this question for you.
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Best 25 Ways to Save Money While Paying Mortgage
Approaching your mortgage as an opportunity to build equity in your home, and not merely with the thought of repaying it.
That includes learning to save interest, fees, and related costs that would free more money to let you pay your principal down faster, or to invest elsewhere. Without further ado, let’s dive into 25 genius tips that could save you a fortune while paying off your mortgage. Cause who doesn’t want to be free of debt?
Refinance Your Mortgage
If the interest rates have fallen since you got a mortgage, this can save you thousands over the loan tenure. Crunch the numbers to see if the upfront costs of refinancing are justifiable.
Instead of giving it in a single monthly payment, make an automatic bi-weekly payment. Essentially, you will pay one extra monthly payment every year, helping you pay down the principal faster without taking a hit to your finances.
Round Up Payments
Another trick in the same alley is rounding up your mortgage payment to the next $100 or $50. That little extra money will be directly used against your principal balance, interest-free.
Put Windfalls Toward Your Mortgage
Put some or all of your lump sum receipts, such as tax refunds, bonuses, or other windfalls, toward your mortgage principal. This will help you repay your mortgage and not make a dent on your monthly budget.
Drop PMI as Soon as You Can
Private mortgage insurance (PMI) can be added to your mortgage payment each month. If you build to 20% home equity, make sure to give your lender a call to cancel your PMI policy and make that added expense go away.
Review Your Escrow Account
In addition, your lender could be over-collecting for property taxes and home insurance from your escrow account. Do an annual review, and if necessary, get your lender to refund any excess funds collected.
Consider a Home Warranty
For an annual fee, usually less than $500, a home warranty pays to repair or replace home systems and appliances during damage, offering financial protection from unexpected big outlays.
Do-It-Yourself Home Maintenance and Improvements
Most of the time, you can get home repairs done yourself, saving on costs for professional help. This can include landscaping and renovation projects.
Energy Efficiency Improvements
New insulation and appliances, along with new windows, may require up-front investments but lower monthly utility bills and increase the home value with time.
Shop Around for Home Insurance
Don’t renew your home and mortgage insurance every year without shopping around for better rates, as the prices vary.
Stick to a Budget
Take into account your mortgage payment, housing expenses, and financial goals. Refer to it regularly to stay on target.
Avoid Taking on More Debt
While a fancy new car or shiny remodeled kitchen might be tempting, adding to your debt can work against you while repaying your mortgage. Postpone large-scale purchases until you have greater built-up equity.
Plan for Property Tax Increases
Research your area’s patterns, then set aside funds that are likely to cover any increased property taxes down the road. Adjusting for this helps avoid sticker shock.
Use Online Tools to Monitor Mortgage Options
Websites like Bankrate can help track current interest rates and can even provide a special calculator that you will use to identify savings on interest for refinancing and other similar actions.
Consider Making One Extra Payment Per Year
If possible, make one additional mortgage payment within the year using tax returns, bonuses, or other spare cash. This can shave years off your loan term.
Cut Unnecessary Expenses
Also, every month, take time to go through your spending and identify what luxuries or indulgences in subscriptions you can cut from your budget, and directly reinvest those savings into your mortgage payment.
Rent Out a Room
Got extra room space at home? Why not rent your room out on Airbnb and get some monthly recurring income that will pay for your mortgage?
Invest in a Side Business
You can come up with a small side business that you could run with a small investment and spend the proceeds on extra mortgage repayments without affecting the main cash flow.
Automate Savings
Set up automatic transfers on pay days to funnel money directly into a dedicated mortgage savings account before you can spend it. You can thus not dip into those funds.
Negotiate Bills
From cable to gym memberships, call up providers and negotiate for better rates. Use competitor pricing to leverage your way into discounts.
Consolidate Debt
Conversely, if you have a few outstanding balances on a credit card or other debt, consolidate them into a lower-interest loan. This avoids the total interest accrued so that you’re able to put more towards your mortgage.
Stay Informed About Tax Deductions
Interest on mortgage and property tax may be deducted from the taxable income. Ensure to fill up all eligible deductions properly for maximum returns, creating more room for mortgage payment funds.
Maintain a Good Credit Score
A high credit score can also qualify you for the very best mortgage rates if you refinance and ensure that any future major loans have lower interest costs.
Use Cashback and Rewards Programs
Utilize the rewards programs offered by your credit cards, including travel and shopping, and convert the redeemable rewards into making mortgage payments.
Reassess Your Financial Goals Regularly
Circumstances change with time, and priorities change. Re-validation of your mortgage and other financial goals would assist in ensuring the strategies and budgeting are in line with the same.
Conclusion
Your mortgage is probably your biggest personal finance obligation—think of all those dozens of strategies as a way not to be left “house poor”.
Take one or more of the above tips, such as refinancing for lower rates, making bi-weekly payments, shopping around for better pricing of your insurance, and ramping up your disciplined saving habits.
Smaller consistent actions can lead to greater savings over your mortgage. It just takes commitment and intent.
Thoughtful strategies, along with the motivation to gain debt freedom, will allow you to shorten the path toward building wealth from home equity and paying off your mortgage ahead of schedule.
You may have to make a few short-term sacrifices, but picture in your mind how free you will be when that financial burden gets lifted off your shoulders. The long-term benefits of being mortgage-free will far outweigh any short-term struggle.
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