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Buying a house is the single largest investment that most families make, and as with all investing, it has its fair share of risks. Trouble paying your mortgage can sap your finances or even cost you your house. The following strategies will lower your monthly payments and thus your financial risks, setting the stage for a sound financial future:
The larger a down payment you make when initially buying a home, the lower your mortgage payments will be afterwards. Large down payments cover more of the property’s principal value, meaning later payments will be calculated as a percentage of a smaller asset. Paying more up front will also demonstrate to the lender that you are serious about buying the house and willing to stake your own money on it. This may convince them that you are a safer risk, making them more likely to give you lower interest rates.
Private mortgage insurance premiums can add hundreds of dollars each month to your mortgage payments. Most lenders eliminate it, however, after you’ve earned a significant amount of equity in your home. Once you’ve paid off more than 20 percent of the property, request that your lender remove this expense.
Due to the 2008 Housing Crisis and other real estate trends, many houses are overvalued for tax purposes. If you have your home reassessed, you may be able to dramatically lower the portion of your mortgage payments that cover taxes. This could also drive your payments up, however, so only do it if you don’t think your home has increased in value.
For more information on finding a home loan you can afford, contact Midland Mortgage today.