10 Home Mortgage Tips
Here are 10 home mortgage tips that everyone who has a home mortgage should follow. These tips reinforce the idea that a home is considered an investment, and payment for the home can have drastic consequences on long-term credit. The hard part of obtaining the mortgage is over, but careful consideration must be made during the payment of the mortgage.
- Always pay on time when possible. According to credit bureaus, a mortgage is considered a large recurring debt, therefore careful attention is placed on how your mortgage is paid. Many mortgage companies offer a waiting period, generally fifteen days. This means that as long as you pay your mortgage payment on or before the 15th of each month, you will still be considered on time and will not be charged any late fees. Follow this home mortgage tip to keep your credit rating high.
Payments are normally not reported as late unless they are paid 30 days past the due date. This home mortgage tip is very important if you find yourself unable to pay your mortgage until later in the month. The reasoning is that mortgage companies usually only report to credit bureaus once per month. For peace of mind, confirm this with your lender.
- Private mortgage insurance (PMI) can be removed from your payment over a period of time. Most lenders have to follow certain guidelines, and one of these guidelines is that PMI can be removed by request from your home mortgage after your principal balance is a certain percentage smaller than the amount of your original loan. Confirm with your lender to verify the exact requirements for your type of loan.
Paying your taxes ahead of time reduces your escrow payment. Check with your local taxing authority to find out if you can pay your taxes ahead of time. If you are offered this option and pay your taxes earlier in the year, obtain a receipt, contact your lender and send it as proof. You can then request a new escrow analysis based on not having to pay taxes for the year.
- You can always shop for less expensive insurance. Cheaper insurance guarantees a smaller payment if you inform your lender. Once done, send proof to your lender and ask for a new escrow analysis. Just make sure you maintain enough coverage and meet your lender requirements for insurance.
- You receive a mortgage interest reduction when filing taxes. Mortgage interest is deductible against federal taxes. If you have a second mortgage, be sure to include this deduction when filing your taxes. A home mortgage means huge savings against taxes.
Additional principal only payments save money. Additional payments made only toward principal drastically reduce the amount of interest you pay over the life of your home mortgage and increase your savings drastically over time. Find a mortgage calculator and determine your savings when paying different amounts toward the principal every month.
- You can pay your mortgage payment without paying your late fees. Many mortgage companies will take a mortgage payment without the additional late fee balance for a few months. Confirm with your lender to find out for how long. Normally they only give you a few months before demanding you pay off any balance of late fees.
- You can borrow against your equity. You can use the results of paying your home mortgage over time. If you ever find yourself in need of money for repairs or improvements to your home, know that you can borrow against the equity or ownership of your home. Home equity rates are usually very low compared to other types of loans.
- Refinancing for better interest rates or terms always saves money. Taking advantage of a home mortgage refinance that offers a reduced interest rate or shorter terms saves you money. Shop around from time to time and take advantage of any bargains on home mortgage refinancing.