By and large the highest expense that most Nashville homeowners have every month is their mortgage. Unfortunately, just because it is the largest one doesn’t mean it is the only one.
With other bills to pay and items to budget for, a mortgage payment can cause Nashville homeowners to struggle to make ends meet. If your finances are feeling the strain and money is a little too tight, consider one of the following ideas to lower your mortgage payment and find some breathing room.
Prior to the housing market crash, home buyers found it relatively easy to obtain a mortgage without making a down payment. While that was nice for buyers that were getting into the real estate market, it left a lot of Nashville homeowners without 20% equity in their home.
In cases like this, most lenders will require you to pay for Private Mortgage Insurance (PMI). This is a tool to assure them they will have repayment should you default on your loan.
However, if Nashville homeowners aren’t paying attention, you may end up paying for this insurance longer than you need to. PMI is only necessary up until you reach at least 20% equity in the home. Therefore, if you have reached the point where your loan is for 80% or less of the value of your house, you can ask them to remove the insurance from your loan. This will bring down your costs immediately.
By and large, most Nashville homeowners opt for the traditional 30-year fixed-rate mortgage. In recent years, Adjustable Rate Mortgages (ARM) have gotten a bad reputation – not all of which is totally deserved. For this reason, many potential Nashville homeowners don’t even consider one when obtaining a mortgage.
While it can be scary to not have a rate locked in for the future, there are many Nashville homeowners that are planning on staying in their house long enough to payoff the mortgage. If you know that you are planning on selling your house after several years, Nashville homeowners can take advantage of the lower rate that an ARM offers. This way, when you sell before the rate adjusts higher in the future you can experience the benefits of the lower rates up front.
However, Nashville homeowners will have to take into consideration the risk involved should your plans not go as you intended.
Despite mortgage rates creeping up, they are still at all-time lows. If you purchased a house several years ago or longer, there is a great chance that you can refinance your current mortgage with a lower interest rate. Doing so will allow Nashville homeowners to pay less interest, reducing your monthly mortgage payment as a result.
However, some Nashville homeowners get trapped into thinking it’s a good time to take out the equity in their home in cash and end up with a larger payment because of it. If you want to lower your payment, make sure you are only taking the lower rate and not additional cash.
There are loans available that will allow you to pay only on the interest for ten years, and then for the remaining 20 you pay on interest and principal. This loan is a great fit for those that have seasonal work. You can pay only interest if need be during the months when money is tight, and then you can pay extra on principal during the seasons when there is a lot more money coming in.
If you are serious about getting your monthly payments reduced, begin your research today. Find a lender to work with and bring them up to speed on your situation. Your lender can update you on the details of different mortgage programs available as well as what options you have.