5 Ways to Effectively Manage Your Mortgage Payments

Being a homeowner comes with a ton of responsibilities. One of the most important…making sure that the mortgage is paid in a timely fashion. However, if you’re like most homeowners, your mortgage is your largest monthly expense. Though proper budgeting can help you to make your payments each month, there are other things that you can do to save money on your mortgage payments so that you can start putting that income to other expenses. Below are just a few options you may have available to you:

1.  Refinancing

One of the first options for saving money on mortgage payments is refinancing. The concept of refinancing is applying for a new loan. This allows you to pay off the old loan with the new one. The reason this is beneficial to homeowners is that the new loan comes with new terms including lower interest rates, shorter (or longer if you need more time) loan periods, and more. There are several programs available for individuals interested in refinancing their loan including government assisted loans FHA streamline loan. For military personnel and their families, there is the option for offers like a Lowvarates.com VA streamline refinance loan. Each loan type and program offers different advantages to qualified benefits.

2.  Add Extra Money to Your Mortgage

Your mortgage is compounding interest, which means that interest is charged each month on top of the principal interest accrued. By adding even an additional $25 a month to your mortgage, you can begin paying more towards the principal balance on the loan. As the principal balance decreases, you’re reducing the amount of interest you accrue each month, thus paying off the loan faster.

If this is an option you’re going to take, make sure that you have contacted your lender to find out if there are penalties for prepaying your mortgage. When submitting extra funds, be sure that you specify that the money is to go towards the principal and not the interest so that your lender knows exactly what you’re trying to do.

3.  Make One Extra Payment Every Year

If you can’t swing paying an additional amount each month, you could decide to simply make one extra payment each year. If allowed by your loan term agreement, you can make an extra payment at the end of each year. Depending on the type of loan you have, doing this every year could allow you to pay off your 30 year mortgage in just 22 years.

4.  Put Extra Cash on the Principal

If you have a lump sum of extra cash that you can afford to use, putting it towards your principal balance can help you pay your mortgage off faster. For instance, income from a part time job, income taxes, bonuses at work, cash back rewards from credit cards, and whatever other income you receive can help put a dent in the overall balance. Remember, you want to make sure when you send in extra money that you specify putting it towards the principal balance and not the accrued interest.

5.  Find Homeowner Insurance Discounts

Though your homeowner insurance payments are separate from your mortgage payments, it can still be beneficial to find savings in this area. The more you can save on insurance, the more income you can put towards paying down your mortgage. There are plenty of ways to save on homeowners insurance, including shopping around for better offers, investing in a home security system, and upgrading certain components in your home to improve its integrity and safety.

Having various avenues to help manage your mortgage payments is ideal to prevent falling behind on payments and ruining your credit. Remember, because your mortgage is a binding contract, you’ll need to review it or contact your lender to find out if there are any penalties you should be aware of. You want to prevent adding extra costs as you pay down your mortgage and save money in the long run.