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Money Saving Tips

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Simple Steps to Reduce Your Bainbridge Island Mortgage Costs

Mortgage rates may rise or fall this spring (lately they seem to be falling!)—but that needn’t prevent you from saving even more money when it’s time to structure your own Bainbridge Island mortgage. The underpublicized fact is that mortgage rates are only one of the factors that affect how much you wind up paying. No matter what happens to mortgage rates in 2014, here are some keys to making mortgage decisions that result in significant savings:

Tailor the term

Evaluate your budget and see whether it is possible to increase the amount of your monthly payment. By increasing monthly repayments, you reduce the term of your Bainbridge Island mortgage. Over the course of the loan, this can save tens of thousands of dollars.

Refinance for five years instead of two

The interest you pay on a refi loan isn’t the only cost. The origination and other fees can easily end up costing four figures. It’s a numbers game: simply calculate the anticipated savings from refinancing, then subtract the amount of the fees. The difference tells you your net savings…and demonstrates why one of the easiest ways to grow those savings is to refinance less frequently.

Change to biweekly 

Changing to biweekly payments instead of monthly payment can save you more than small change. The reason is on the calendar: there are 52 weeks in a year, but only 12 months. If you make 26 1/2 payments every year, that equates to 13 monthly payments. It’s a stealthy way to make an additional month’s payment every year without really noticing it. When choosing a loan, opt for one where the bank allows you to choose biweekly payments (as long as they don’t want to charge an additional fee). Also request that the extra payments be deducted from the principle.

Improve your credit score

On this count, every mortgage guru sounds like a broken record. Although the average quoted mortgage rate may rise or fall, that’s not necessarily the rate that you pay. Your FICO score is the primary determinant of your mortgage rate. The difference between a good FICO score and a bad one can be significant, so get a copy of your credit card record and challenge any damaging inaccuracies. Lenders want to see a long history of paying on time with a mixed use of credit.

 Mortgage rates on Bainbridge Island will almost certainly increase in the future because they’re still well under historical averages. But there are plenty of steps you can take to cut thousands of dollars from your ultimate Bainbridge Island mortgage costs. And if you are ready to buy a house on Bainbridge Island this spring, contact me today—I’m ready to show you what’s coming up at your price point!

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Three Money-Saving Tips for Your Bainbridge Island Mortgage

Your mortgage: you only think about it once a month (if you’re on autopay, maybe not even that often).

Like all aspects of your big-picture financial planning, keeping an eye on your mortgage can be an extra wealth-building move. I can point to three reasons why re-evaluating your Bainbridge Island mortgage could pay dividends:

Down, Down, Down…

With interest rates continually making headlines, this one might be a no-brainer. But some don’t realize just how attainable significant savings may be: a drop of just a single percentage point in the Bainbridge Island mortgage rate can make a gigantic difference. A general rule of thumb is that if you can lower your interest rate by a percent or more, it usually makes sense to refinance. It’s certainly worth looking into.

Pay More Sooner (Build Wealth Quicker)

Nobody wants to part with more hard-earned cash than necessary, but extra money out now can wind up saving a lot later. Making just one extra payment a year will have you owning your home free and clear sooner!  Sound too painful? It needn’t. See if you can set up bi-weekly payments of half your monthly mortgage amount. You'll be making 26 payments annually: the equivalent of 13 monthly payments! Confirm with your lender that the extra payments go toward principal.

Eye That Equity

If you’ve got a PMI payment, you know that extra insurance doesn’t come cheap. So why make the extra payment a single month longer than necessary? By law, your lender is required to stop charging you PMI after you accrue 22% equity in your home. But in many cases, once you hit 20% equity, simply writing a letter to your lender will prompt them to allow you to stop paying PMI then and there.

For most of us, our home on Bainbridge Island is one of the largest investments we’ll ever make. Got a real estate question? I’m here all the time to supply you with friendly help and advice!

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