Finance Tips: Ways To Save Money On Your Mortgage

Various ways that you can save money on your mortgage by refinancing, making extra payments and other money-saving tips.

A lot of people are none-the-wiser when it comes to taking a mortgage. We fall in love with the home, go to the bank and sign the papers, usually without realizing what it all means. And many people go directly to the institution that they are most familiar with, never realizing that a less costly loan is available elsewhere. When you first take out a loan on your home, try to view the overall picture, and choose the highest payment that you can afford, for the shortest amount of time, to save money in the long run. Many people choose the smallest payment, but over a long period of time, this can end up costing extra thousands from your pocket. Don't set the payment so high that it will be difficult to pay, but choose the shortest time and most comfortable payment in order to save a bundle.

You can save money on your mortgage, even if you just financed a couple of years ago. Rates are even lower now than they were two years ago, so you could possibly refinance your home at a lower rate than you originally got. Your mortgage company may not call you and let you know that rates have dropped again, but if you call them and inquire about a lower rate, you can probably get one, and do it without closing costs or attorney fees. Some institutions offer a refinancing loan where the customer can trade their current loan in for one where the payment time is cut by up to half, and the interest rate dropped by as much as 2 or 3 percent. Although the payment itself might be slightly higher, the pay off is much faster and can save thousands.

Don't let the financial institution talk you into including the home insurance in with the payment. The house payment will be much higher than it would be if you make the house payment to the institution and take out a separate insurance policy. Never let your insurance lapse, even accidentally, and make sure to have enough coverage, because your contract might state that they institution can add insurance on to your house payment if you don't keep the policy current and sufficient.

Whenever possible, make an extra payment on the house. Even if it's only once a year, the extra amounts you pay add up to save you quite a sum. Money over and above the normal house payment amount is applied directly to the principle, reducing the amount of interest you pay. Consider making an extra payment if you receive a tax refund yearly. Maybe even make two extra payments - you won't believe how much you'll save.

Do a little research before deciding on the company that will finance you and make sure they not only offer cheap rates, but are a reputable company. When refinancing, thoroughly read or have an attorney look over the paperwork to make sure that hidden fees and such are not being charged during the refinancing. Also, read the fine print to see that the original terms of the loan have not been altered. Online institutions are now competing against one another to win over your business and it's likely you can get a great deal that way, but check the company with the Better Business Bureau and read all documents carefully before signing.

© High Speed Ventures 2011