Don’t wait too long before taking a peek at my newest listing in Settlers Bridge.
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Have you ever dared to look at the total amount of interest you’d pay if your mortgage went to a typical 30 year term? Yikes! Want a few simple ways to cut that interest down to size? Found this great article written by Barbara Bayer that I thought some of you might enjoy.
Send in extra money to pay down principal
In the mid-1970s, Marc Eisenson coined the term “banker’s secret,” which promoted a cost-saving idea: Pay more than required on your monthly mortgage, and you’ll save a pile of money. Eisenson says, “It was a secret that bankers knew, but didn’t share with their customers.”
Here’s how it works. If you take out a $200,000 30-year mortgage at an interest rate of 6%, and hold it to term, you’ll pay a total of $382,537.97 for your home, including interest of $182,537.97. However, if you send in just $100 each month in additional principal, you’ll save more than $49,000 in interest over the term of the loan.
There’s another huge perk: You’ll pay off the loan five years and five months ahead of schedule. This strategy puts you in total control of the restructuring process, and there are no fees involved.
Another way to pay off your loan early is to use a bi-weekly payment plan. Banks and third-party companies can implement this plan for you, but they’ll charge hundreds or thousands of dollars in fees. We don’t recommend you pay for the service unless you lack the self-discipline to make the payments yourself.
With this strategy, you make half your monthly mortgage payment every two weeks, which equals 13 payments a year instead of 12. With bi-weekly payments on a 30-year $200,000 loan, you’ll save more than $49,000 in interest over the course of the loan, and pay it off approximately five years earlier.
Other ways to easily do it yourself:
- Make one additional mortgage payment per year at any time.
- Divide your monthly payment by 12, and add that extra amount each month when you pay your mortgage.
Recast mortgage for lower payments
If you want to lower your monthly payment and have at least $5,000 to contribute, you can request a mortgage recast. In this scenario, you don’t change the interest rate or term of your mortgage, you change the principal balance, and the term begins anew.
Here’s how it works: After 10 years of paying your 30-year mortgage with a 6% interest rate and a monthly payment of $1,432.86, your balance is $200,000. With a mortgage recast, you contribute an additional $20,000, and have a new principal amount of $180,000, with the same remaining 20 years to pay it off at 6%. However, your new monthly payment is $1,289.58, for a savings of $143.28 per month.
There’s a small fee for this service — approximately $250. The bank gets nothing out of this except retaining your loyalty, so they don’t promote it. It’s up to the lender whether it’ll do it, so all you can do is ask. It’s also likely to be a lengthy process. You have nothing to lose, however, except a higher monthly payment.
Refinance your loan
The most common way to restructure your loan is with a mortgage refinance, where you replace your current mortgage with a new one at a lower interest rate. If you took that same $200,000 balance on your 6% mortgage and refinanced into one with a 5% interest rate, you’d reduce your monthly payment from $1,199 to $1,074, saving $125 monthly.
Refinancing may be challenging to get approved for in a tight lending environment, where you need stellar credit scores and a steady job history. You’ll also need to pay closing costs, which can run 3% to 6% of the loan amount.
These tips are appropriate if you’re current on your mortgage and have extra money. Struggling home owners should consider the government-sponsored Home Affordable Modification Program (HAMP) for mortgage restructuring.
With vacancy rates, mortgage interest rates, and property prices still low many people are considering starting their rental portfolio. In order to start your rental property business, how do you finance your first home and get started?
If you can buy as an owner occupy and live in the property for 12 months you can get the best financing. Currently you can get a loan with as little as 3.5 percent with FHA financing and often times the seller may help with closing costs. After a year you can purchase your next property, live in it, and rent out the original. If you are thinking about your financial future and have time on your side this is an excellent way to get started.
If you want to buy a rental property without occupying, you will need 20 to 25 percent as a down payment for most loans and decent credit. If you have cash or CD’s this may be a good time to convert your liquid assets into an investment property and increase your rate of return.
Now is a very good time to buy investment property. With some thoughtful planning and a little hard work you can increase your income stream and plan your future retirement.
For more information about purchasing and financing investment properties in the Boise, Eagle, Meridian, or surrounding Treasure Valley area contact me at this link or call me at 208.890.8390. I’m always happy to assist with your real estate needs.
You’ve stared out that window for months since it’s been cold and wintery. Now it’s time to make that backyard living space dream come true.
Go ahead, get your fingers dirty and soak up some of the vitamin D while you’re at it. I hope you live somewhere like the Boise area that is enjoying some fabulous spring weather today.
I hope you’ll find some garden inspiration from this article. Click here to read.
Thanks for visiting my blog. Feel free to comment here or contact me to chat about the Boise, Eagle, Meridian, or Star real estate market.
Recently, I viewed a new listing on our local database that featured a small bathroom, toilet seat up, used towels on the floor and other items I will refrain from mentioning. A couple of minutes to “tidy up” and stage a home before taking the marketing photos can go a long way in making a great first impression. Great photos will result in more showing appointments.
Since most homebuyers begin their shopping on line, care and attention to detail should be given to each homes photos. Studies have shown that you’ve got only a few seconds for prospective buyers to look at the house before they click the mouse and move on. The photography is critical.
My suggestions to my sellers prior to taking photos is to first make the house sparkle like a brand new penny. Another important part of preparing a home for marketing is to remove clutter. Sometimes a few staging items can add a lot of punch and make a room look fresh and new. There are plenty of places to find affordable items to liven up a room without breaking the bank. You might even find staging treasures in your closets and garage.
Often what’s in the picture will inspire a potential home buyer to schedule a walk-through or not to. This can be as important as the number of bedrooms or bathrooms for the initial preview. I like my sellers to create a warm and cozy atmosphere that transmits into the photos we take. Adding fresh flowers, scented candles, and playing some soothing music does make a big difference.
Fortunately, I have a love for selling homes and photography so it’s a great combination. It’s like a glamour shot for your house with staging instead of make up for the model.
Be sure when hiring a Realtor to market your home, that you entrust it to someone that has attention to detail in mind. It can make the difference between SOLD or for sale.
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If you need help marketing your home in the Boise, Meridian, Eagle, or Star area, I’d love to be of assistance. Click here for more contact information.
Weekends are always a great time to try a new recipe. How about inviting some friends over, decorating the table, and making some great memories? Whether it’s a simple recipe and a new board game or something more elaborate, just do it! I’d love to hear some feedback on these recipes or see some photos if you try them.
Click here for some fabulous recipes including best ever carrot cake with cream cheese icing, roasted cauliflower with herbs and parmesan, gazpacho, and portabella parmesan. You will find a link at the bottom of the recipe page that enables you to print any of the ones you’d like to try.
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If you find yourself in need of a new kitchen to whip up those recipes, I’d love to help. I specialize in residential real estate in the Boise, Eagle, and Meridian area of Idaho.