Tag: Refinancing

How to Save Money on Your Mortgage: 5 Effective Strategies

Posted on by Jessica Ward

How to Save Money on Your Mortgage: 5 Effective Strategies

It’s common knowledge that you’ll pay interest when borrowing money for a mortgage, but when it comes to home buying, many people don’t realize just how much that interest can add up. Say you’re approved for a $500,000 30-year mortgage at a 6% interest rate. If you make your monthly payments as required, you’ll end up paying close to $579,190 in interest alone over the life of the loan. That’s more than the loan principal itself! But don’t worry—there are ways to significantly reduce the total cost of your mortgage.

Whether you’re a first-time buyer or looking to save on an existing loan, here are five proven strategies to help you save money.

Save money, mortgage, How to

1. Drop PMI (Private Mortgage Insurance)

Private Mortgage Insurance (PMI) is required if your down payment is less than 20%. It can add hundreds to your monthly payment. The good news? You don’t have to pay PMI for the life of your loan.

Once you’ve built 20% equity in your home, you can request to have PMI removed. By dropping PMI, you could save thousands of dollars each year. Be sure to contact your lender once your home has appreciated or you’ve paid down enough of your mortgage to reach this equity threshold.

Pro Tip: Keep track of your home value and mortgage balance so you know exactly when to request the PMI removal.

2. Utilize a Mortgage Calculator

Before taking on a mortgage, it’s essential to understand how much you’ll actually be paying over the loan term. Mortgage calculators are valuable tools that help estimate monthly payments, total interest paid, and the effects of various loan terms.

By adjusting loan variables such as term length and interest rate, you can see how different payment strategies will impact your bottom line. This will also help you budget more effectively and identify cost-saving opportunities.

Mortgage calculator

Pro Tip: Use the mortgage calculator to simulate making extra payments or changing the loan term from 30 years to 15 years. You’ll be surprised at how much you can save in interest!

3. Recast Your Loan

Loan recasting is a lesser-known strategy that can save you thousands. After making a significant lump-sum payment toward your mortgage principal, you can request your lender to “recast” or recalculate your loan based on the new balance. This reduces your monthly payment without changing the loan term or interest rate.

The best part? Recasting typically involves a low fee compared to refinancing, and it’s a great way to lower your payments while keeping your existing loan terms.

Pro Tip: Check with your lender to ensure they offer recasting as an option before making a large principal payment.

4. Refinance Your Mortgage

Refinancing can be one of the most impactful ways to save on your mortgage. When you refinance, you’re essentially replacing your existing loan with a new one—usually at a lower interest rate.

With interest rates often fluctuating, timing a refinance when rates are low can save you tens of thousands of dollars over the life of your loan. You can also choose to switch to a shorter loan term (e.g., from 30 years to 15 years) to save even more on interest, although this will increase your monthly payment.

Pro Tip: Watch market trends or consult with a mortgage advisor to see if refinancing makes sense for your financial situation.

5. Make Principal-Only Payments

One simple yet effective way to save on your mortgage is by making additional principal-only payments. By paying more than your required monthly payment and applying the extra amount directly to your principal, you reduce the loan balance faster, which in turn reduces the interest you’ll pay over time.

Even small amounts can make a significant difference. For instance, adding an extra $100 to your principal payment each month could shave years off your mortgage and save you thousands in interest.

Pro Tip: Make sure to specify with your lender that any extra payments go toward the principal balance.

Conclusion

Paying off a mortgage may seem overwhelming, but with these strategies for how to save money on your mortgage: dropping PMI, utilizing a mortgage calculator, recasting your loan, refinancing, and making principal-only payments—you can save a substantial amount of money. Remember, even small adjustments can lead to significant long-term savings. Take control of your mortgage today, and start working toward financial freedom.

A GOOD TIME TO REFINANCE? WE ASKED THE BEST IN THE BIZ.

Posted on by Aryne + Dulcinea

Is now a good time to refinance? We asked the best in the biz!

 

Aaron Nawrocki with Capital M Lending is a master at his craft and we’ve been working with him since the inception of our business. Aaron can be reached at 503-445-9525, or email him at aaron@capitalmlending.com.

Here is what Aaron has to say:

“I’d say just that if you’re paying over 4.25% in interest, it would be good to reach out to your lender of choice and have him/her run numbers to see what the monthly savings and one-time costs would be. It’s worth looking at for sure.”

Hillary Seiler with Umpqua Bank is our go to for ADU construction, new builds, and home remodels. She is very creative and will work hard for you. Hillary can be reached at 503-804-4460, or email her at hillaryseiler@umpquabank.com.

Here is what Hillary has to say:

“Now is a great time to look into your refinance options. The Federal Reserve has lowered their lending rate to banks which in turn lowered mortgage rates again! The rates range in the low to mid 3’s (changing daily). If you are interested in refinancing to lower your payment, cash-out on your existing equity to do a renovation, home project or simply pay down debt, now is a great time to look at your options and see what might work for you.”

Steph Noble with Guild Mortgage is beloved by many customers and real estate agents alike. She is a frequent speaker at real estate sales meetings and educates us on  mortgage market. Steph can be reached at (503) 528-9800, or email her atsnoble@guildmortgage.net.

Here is what Steph has to say:

“I do think refinancing now is a great option. There are a couple of benefits depending on each situation.

A new 30 year fixed rate loan can reduce monthly payments and help any homeowners who want to ensure monthly obligations are as low as possible. Especially important if they forsee any changes to income or employment due to COVID19.

For homeowners without concerns related to income and employment I’m LOVING the 20 year loan. The rates on that have been about the same (and in some cases LOWER) than the 15 year loan. Most clients I’ve worked with have an increase in payment that is manageable and yet the interest savings are massive.

Lastly – refinancing now to get cash out for home improvements or to pay off other debt is another sweet spot for some clients. There are several peeps I’ve been working with who have projects in mind for after COVID19 restrictions are lifted. They are getting the funds they need now for their project since the rates are low.”

Want to find out more-reach out to the lenders above or give us a call today.

About Us:
Over the course of their professional partnership, Aryne + Dulcinea have helped over 200 clients prosper in their new lives. During this time, they have prided themselves in their top-notch selling abilities, with homes outperforming market standards, consistently exceeding list price while most of their listings sell in under 7 days. Whether you’re looking to buy or sell, Aryne & Dulcinea will work in collaboration to guide you in investing in your future and reaching your real estate goals.