A large chunk of your take-home pay probably goes to your monthly mortgage payment, which includes the loan’s principal, interest, property taxes, and homeowners insurance. Most Southern Maryland homeowners just live with the pain, even though they could take some concrete steps to lower the payment.
It’s not easy, and it does require some effort on your part. But wouldn’t that be worth it if you could lower your monthly house payment?
Dump the high interest rate
Mortgage interest rates have been at historic lows, but many Southern Maryland homeowners bought their homes during periods of high interest rates. Rates are rising, you you’ll need to take advantage of this tip toon.
When you refinance your Southern Maryland home with a new mortgage that has a lower interest rate, your monthly payments will naturally go down. For example, if you bought your house in 2003, you are probably paying about 5.83 percent in interest.
If you locked in at today’s rates – 4.625 percent as of this writing – and your house payment will be reduced significantly.
There are parts of refinancing that you need to consider before jumping into it, so run the idea by your accountant or financial planner first.
Lower your property taxes
Depending on where you live, paying your “fair share” to help fund our schools and local government can add a hefty amount to your monthly house payment. In fact, according to the Census Bureau, the average American homeowner pays $2,197 in property taxes every year.
This adds more than $183 to your house payment each month. If you live in a high-tax state, such as Illinois or New Jersey, you may pay close to twice that amount.
The first step to lower property taxes is to dig out your current assessment and check to ensure that everything in it is accurate, from the home’s square footage to the number of bedrooms and bathrooms. If you do find errors, or if you know of homes in your area that are more expensive yet the homeowners pay less in taxes, you may be able to dispute your tax bill.
Most county assessor’s offices have procedures to file disputes.
Are you paying too much for homeowners insurance?
The average American homeowner pays about $1,083 each year (a bit less than $100 per month) for homeowners insurance, according to ValuePenguin.com.
Many may be paying too much, says a Consumer Reports study. Among respondents to the survey, “[a]bout 9 percent switched insurers in the previous three years, and more than half reported finding a better price,” according to Jeff Blyskal at consumerreports.org.
He goes on to say that homeowners “can save hundreds to more than $1,000 per year in premiums by shopping around.”
Insurance companies use your credit score when determining your premium, so work on raising your score to get better rates.
Blyskal explains that “an insurance premium for a 45-year-old homeowner with a fair credit score would be 36 percent higher than if she had an excellent score, on average nationally. If the homeowner had a poor score instead of an excellent one, her premium would be 114 percent higher.”
Get rid of PMI
Private mortgage insurance (PMI) or the Mortgage Insurance Premium (MIP) if you have an FHA loan, is both a blessing and a curse. It’s a blessing because it helps Americans who might not otherwise be given a mortgage to finally become homeowners.
The flipside, however, is that the premiums are tacked onto the house payment every month. With a conventional loan, PMI is removed when the homeowner obtains 20 percent equity in the home.
FHA’s MIP, however, remains for the life of the loan. But, if you’ve hit that magical 20 percent equity mark (and 80 percent loan-to-value), refinance into a conventional mortgage and do away with the MIP payment every month.
Fort Washington MD Homes for Sale and Real Estate Services in Southern Maryland. You now have a search engine to help you with your Southern Maryland home search! And I’m ready to provide you with a custom home valuation if you’re considering selling your home. Let’s connect to discuss how I can help you. Contact Kimberly Bean at 301-440-1309
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