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Four Ways To Save On A Mortgage

With more individuals, families and businesses moving to Houston, it’s no surprise that the real estate market has boomed in recent years. However, the market can be fickle and unforeseen circumstances arise that sometimes make it hard for mortgages to be paid. The following four tips can help individuals and families save on a mortgage.

1. Add an extra annual payment:
   By adding an extra payment to the principal balance of the loan, it helps to reduce the total amount owed quicker. If done regularly, this can shave years off the loan and reduce the amount spent in interest charges. However, this doesn’t mean a payment can be skipped.
2. Modify the existing loan:
   If all mortgage payments have been made on time and are consistent, there is a possibility of a loan modification. Usually, a bank will contact the individual paying the loan with a potential loan modification, but there are also ways to pro-actively seek one. Contact the bank that oversees the loan and inquire about modification options. Be sure to ask if that particular bank still owns the mortgage loan. If they don’t they can’t modify the loan. Inform the bank (owner) of the loan of any financial hardships (if any). Assemble any financial documents the bank may need from you – including two pay stubs, latest W2, K-1s and any investment assets. If a bank puts off the request, don’t stop contacting them.
3. Set-up a bi-weekly payment plan:
   Many lenders won’t accept partial payments, so instead, have half of the payment automatically transferred in a savings account every two weeks. At the end of the month, have the money transferred to the lender. At the end of the year, 13 payments would have been made instead of 12.
4. Refinance to a lower interest rate:
   There are many reasons why a loan may be refinanced, so be sure to calculate all payments and potential savings before making this decision. A lower monthly payment comes with a higher interest rate, resulting in more spent. If an individual is planning to sell their home in a few years, it may not be worth refinancing. Getting a lower interest rate may not be the best decision for individuals well into paying back a mortgage because it will add more time for the payoff, but individuals who aren’t that far won’t see much of a change. 

These are just a few ways to save on your mortgage. Be sure to ask questions and not accept the first loan that comes along. Understanding the details of a major decision like this can make the difference between saving money and losing money.

30 Year vs. 15 Year Conundrum

Buying a home is one of the most important financial decisions of your life. Knowing and understanding which home mortgage loan type to choose is critical.

The first step is choosing the right type of loan. Fixed-rate and adjustable-rate mortgages are the most common, but there are also Veteran Affairs, Federal Housing Administration, balloon, interest-only and reverse mortgages. Thus, the best choice will depend on your financial position, the state of the economy and your willingness to take a risk.

There are several questions you should ask yourself when deciding on a loan:

1. How long do you plan to be living in that particular house?
2. Are you willing to take financial risks?
3. Are there restrictions associated with the loan options?
4. Are there any penalties you will incur?

Below is a quick rundown of the mortgage options you will most likely see:

30 Year Fixed Rate Mortgage

1. Helps you purchase a more expensive home that meets the families real needs, and allows you to pay for it over time.
2. Has an increased tax deduction because you’re paying more annual interest.
3. Provides flexibility for families with fluctuating monthly income by allowing them to pay more or less based on their monthly cash-flow.

 15 Year Fixed Rate Mortgage

1. Homeowners are able to pay off their home faster while also earning equity faster, which helps support their overall financial plan.
2. Homeowners will be able to save interest, which adds up significantly over 30 years.
3. A 15 year mortgage allows families to align their mortgage with significant life events such as retirement or a college education.

At Zeus, we offer a customized mortgage term, which allows families to pick their monthly payment first and their term second in order for the mortgage to fit your needs. Also, some homeowners have a fear of refinancing due to not wanting to start a 30-year term all over again. However, with our customizable terms, you can have a lower interest rate and a lower monthly payment. For example, a family who has already paid their 30-year mortgage for four years can simply use out automized mortgage to refinance for 26 years while lowering their monthly payment and/or interest rate.