Concentrate on the “big profits” instead of small ones to save more in 2021. (iStock)
Inevitably at the end of the year and after a wintery holiday season, the American consciousness is going to save money.
Many consumers focus on micro-adjustments to put more cash in the monthly household budget: to skip the slats, reduce subscriber services, and plan more meals at home. While these smart moves do save money, it is actually macro adjustments that make the most significant difference.
One great way to save is by lowering your biggest expenses – especially monthly mortgage payments. There is one thing you can do now and notice fast results. This is what you need to know.
How can I reduce my monthly mortgage payment?
Due to the effects of the coronavirus pandemic on the US economy, interest rates are still at a low point. This means that homeowners who refinance in the next few months can shave off hundreds of their monthly payments and effortlessly put more money in their pockets each month, needing no coupons.
Are you interested in seeing the current refinancing rates? Visit Credible to find out more rates and lenders within minutes.
For beginner refinancers, there are many online calculators that can quickly illustrate the actual figures of how much money you can leave on the table by not refinancing.
For example, say you bought a home in 2016 and want to refinance $ 300,000 after another 30-year fixed-rate fixed-rate loan. The mortgage rate you received in 2016 was pretty good at 3.75%, but now you qualify for 2.75%. This difference of just 1 percent saves $ 263 on the loan each month and nearly $ 15,000 over the life of the mortgage.
To understand how much you could save on monthly mortgage payments by refinancing now, pinch your numbers and compare rates with Credible’s free online tool. Within minutes you can see what several mortgage lenders are offering.
It is important to include all closing costs in your calculations, as this will affect when the new loan ‘breaks even’ and the real savings can begin. The calculator we recommend here are the factors that include these closing costs so that consumers can weigh the true cost benefit when evaluating mortgage options.
WHY IT IS A GOOD IDEA TO REVIEW YOUR MORTGAGE WHILE RATES ARE LOW
What about the negative market fee?
To sum up: in December 2020, in response to the refinancing, the Federal Housing Financing Agency added a “negative market fee” of 0.5% to all refinancing loans of more than $ 125,000 sold to Fannie Mae and Freddie Mac is. As the largest buyers in the secondary mortgage market, more than 70% of the mortgage loan is sold each year to Fannie Mae and Freddie Mac, which means that every home buyer has to pay this fee, even if you are not sure what will happen once you close on the mortgage loan.
With the unfavorable market fee, every $ 100,000 of money refinanced costs an extra $ 500. If the difference between your original rate and the rate you are currently receiving is large enough, it can offset the negative market fee and then a little. This is why it is important to buy from Credible at various credit providers, talk to a loan specialist and perform the savings calculations accurately.
‘Is this a good time to refinance anyway? Yes. Mortgage rates are very low at the moment, even with the built-in negative market fee, ”advises Casey Fleming, mortgage advisor from Silicon Valley, CA, and author of ‘The Loan Guide: How to Get the Best Possible Mortgage’. “If you can save money, don’t let the unfavorable market fee stop you from doing it.”
With Credible you can get a complete picture of how much this new refinancing fee can affect you and your personal finances. Break the numbers today with Credible’s free online tools to find out.
WHO IS RECEIVED FROM THE NEW HOUSE FINANCING MONEY?
Other Ways to Lower Your Mortgage Loan
If refinancing is not currently the best option for you, there are a few other ways to reduce your monthly mortgage payment:
- Rent rooms in your home to long-term tenants.
- Consider naming the house on Airbnb.
- Sell your current home. If you move over the next few months, you will qualify for a new mortgage at low interest rates.
- Spend more money when buying a new home to reduce the amount you pay each month.
- Consolidate debt into a personal loan with a lower interest rate. With the extra savings each month, you can spend extra on your mortgage, or to increase the emergency savings.
Look at what kind of personal loan rates you qualify for today to see if it makes sense to you.
EVERYTHING YOU NEED TO KNOW ABOUT PERSONAL LOANS
Lowering your monthly housing has a huge financial impact. If the above ideas do not sound appealing, refinancing can often be the fastest way to save, provided you find the right rate and lender. Investigate the available refinancing options within minutes by visiting Credible.