There is more to saving money on your mortgage payment each month than first meets the eye. Many times when I talk with people about some of the best ways to save money on their mortgage, 99% of the time we end up talking about getting the lowest possible interest rate.
Which of course is a great way to save money each month.
But there are also a few other ways to save money each month on your mortgage than just finding the lowest interest rate possible.
Your monthly mortgage payment is made up of different things: Principal, Interest, Taxes and Insurance. PITI is a common way for people in the real estate world to describe it.
Principal and Interest is the amount of money that you pay towards the principal balance of the loan each month and the interest that is associated with that principal at a given interest rate. The principal and interest portion of your payment is just s simple math calculation that arrived at using the interest rate of your mortgage note, the principal amount of your loan and the number of years your mortgage is amortized for.
Taxes. Here is a relatively little-known piece of information – you may be able to save money on your annual tax assessment if the value of your property has went down down. If your property value has gone down and you think that the county assessors office has not accurately reflected this in your tax bill, there are processes in place where you can appeal the amount of taxes that are to be due.
Insurance. There are two types of insurance: homeowners insurance and mortgage insurance. The best way to save money on your homeowners insurance is to shop around using a homeowners insurance quote service that will help you pay less each month. You might be surprised how much you can save just by making a few phone calls.
Mortgage Insurance. Mortgage insurance is the money that the lender requires you pay if you are below a certain loan-to-value ratio on your home. The best way to save on mortgage insurance is to work toward getting enough equity in your property that the lender will no longer require it on your loan. If you have a conventional loan, ask your lender what it would take to get rid of your mortgage insurance. This is something that you don’t want to wait for your lender to call you on – you may be waiting forever. It is not a common practice for lenders to call homeowners and ask them “hey, do you want to save money by not paying mortgage insurance?”
Remember – when shopping for a mortgage, there is more to saving money each month than just getting the lowest “PI” possible — don’t forget to shop for the “TI” part as well, you might be surprised how much you can save!
Justin McHood is a nationally published mortgage expert who lives and works right here in Arizona. You will normally find him wearing a blue starched shirt (he says that it goes well with is orange hair) and you can learn more about him at ArizonaMortgageTeam.com