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You can save on mortgage interest and/or mortgage insurance.
By paying an additional amount, toward the principal on your home loan payment each month
you will save handsomely. For example, you have a home loan for $150,000, with a loan term
of 30 years, at 8%
interest. Your principal and interest payment = $1100.65 /month. (Property taxes &
insurance are not calculated in this example). Your total interest payments over
360-months= $246,233. Suppose you pay an additional $125 each month toward your mortgage
payment. You would reduce the term of your loan to 255 months , saving almost NINE YEARS
worth of payments! The total interest paid would decrease to $162,150, a SAVINGS OF OVER
$84,000 in INTEREST!
Another way to potentially save thousands of dollars requires a $300 investment. Most
mortgage lenders require homeowners, who initially invest less than 20 percent of the
purchase price of the home they purchase, to buy private mortgage insurance. The
insurance, often called PMI (Private Mortgage Insurance) or MIP, is intended to insulate
the lender's risk. The lender with 20% down has greater collateral than a lender
with five or ten percent down. From the lender's point of view their risk is greater
therefore they require the borrower to offset the additional risk by paying the private
mortgage insurance premium.
PMI insurance payments vary and are paid monthly as part of your mortgage payment, much
like you pay your homeowner's insurance and taxes. The number of homeowners paying for the
coverage has swelled in recent years as lenders have loosened requirements and allowed
more mortgages with 5 or 10 percent down payments. You may be eligible to cancel the
insurance when your mortgage principal (the amount you owe) equals eighty percent or less
of your home's value. Lenders use the phase loan to value or LTV.
You must take the initiative. If you believe you qualify, proof of value must be
presented to your lender. The first step is to call your lender. Many lenders
have approved appraisers and may require you use an appraiser on their approved list to
document the value of your property. Your appraisal, will cost approximately $300. If you
purchased your home with less than 20 percent down, you are probably paying PMI.
Most markets in the US are appreciating. Before you pay for your appraisal you may wish to
complete the form at http://www.tfarrell.com/freecma.htm
By completing and submitting this form, I will complete a computer market appraisal for
you at no cost. Please fill in all the form blanks and a I will contact you within
24hours of receipt of your information.