Rebecca Richardson - Mortgage Consultant
Saving Money on Your Mortgage
One question I get asked by clients quite a bit is how do I save money on my mortgage?
Let's say that your rate is a great rate and there's no benefit of refinancing, how do you save money on your mortgage? Well, a great way to do that is to save on the interest that you pay. Sometimes people will think that to save on the interest that you pay, you have to go into a formal agreement where you're paying every two weeks or making bi-weekly payments. Actually, you don't have to do that. Because a lot of times, that's actually administered by a third party that you're paying to set that up. I just think that you should be in control of your own money. A suggestion that I have for clients is to make that extra yearly payment, take your payment, divided by 12, and then add that to your monthly payment.
Let's say that your principal and interest payments $1200, you divide that by 100, or you divide that by 12, you've got an extra $100 a month that you would then pay towards your mortgage. So the reason that that's helpful is every little bit extra that you add to your mortgage payment, goes to your principal balance. It doesn't have to be a big lump sum of $50 $25 $100 whatever, it goes through your principal balance. And each month even though your principal and interest payment is the same every month, it gets recalculated based on the principal balance. As that principal balance goes down, more of your payment is going towards principal payment and less interest. That can be a great way to cut some years off of your mortgage. By adding a little incremental amount each month, it does add up and it's very easy for you to control on your side so you can turn it on and off, meaning adding that extra payment in or not based on your own personal cash flow.
I hope you find that helpful. If that generates any questions for you. I am here to help and I would love to talk with you to take care of and answer any questions that you have about how to best set up your strategies to achieve the goals that you have.