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Guardian's Guide To... 4/1/2020 8:10:22 AM

Spring Cleaning Your Mortgage

As winter comes to a rest and spring begins to bloom, cleaning is on everyone’s mind. Probably even more so than years past, in fact. And while it’s a great time to clean up and organize your living space, it’s also the perfect time to spring clean other areas of your life. Like, your mortgage payment.

There’s always a chance you could be paying less each month, for a number of reasons. Or maybe you’re ready to pay a little more on a shorter term. Regardless, it’s worth the time to examine your cost of homeownership and tidy up where you can. Below, we’ll outline a few places to start.

Refinance*

Depending on how long you’ve been in your current home, there’s a good chance interest rates are much lower than when you opened your mortgage. Even if you’ve refinanced before, there’s still a good chance you’d qualify for a lower rate, saving you money. Are you looking to consolidate debt, pay for college tuition, or a new home improvement project? Our cash out refinancing might be the right option for you. Or, maybe you’re ready for a shorter term loan. In which case, refinancing is a good place to start. You’d still get to take advantage of today’s low rates, but will have a higher monthly payment. And if you’re in a position to handle it, this is a great way to own your home outright in a lot less time. If you want to look into refinancing options, you can check out our refi calculator here.

Tax Refund

Spring time is tax time. Something many people don’t look forward to, especially if they view filing as a tedious process. But it’s a necessary hassle, and who knows ­- you may be receiving a refund! If you think you will receive a refund, you might have already decided how to use that money. But if you haven’t, using it as an additional payment toward the principal balance of your mortgage is a great idea. In fact, any time you’re able to pay a little more each year toward your mortgage, we recommend it. For example, making one additional monthly payment each year can shave up to four years off your mortgage.

PMI

Private mortgage insurance, better known as PMI, is required on certain loans if you’re not putting a certain percent down on the loan. So, if you don’t have PMI, then skip ahead. But if you do, you may not know that it actually drops off once you paid off a certain percentage of your original mortgage amount. Typically, this is around 80%. If you’ve reached that point and your PMI has dropped off, congrats! You now have a few extra bucks in your pocket each month. It may be a good idea to continue to pay whatever your PMI amount was toward the remaining balance on your mortgage. If you aren’t sure, a quick call to your mortgage company can tell you how much is left to reach the PMI drop off point or tell you when it dropped off.

Additionally, if your house value has increased since your time of purchase, your Loan to Value (LTV) ratio may be at a point to help discontinue your PMI early. Your mortgage company can tell you the steps required to get your new house appraisal to prove the new house value to measure your new LTV.

Insurance

If you’ve had a few claims over the years, and even if you haven’t, there’s a chance your homeowner’s insurance has gone up. And if it has, your mortgage payment has gone up with it. So, this can be a quick and easy way to ensure you’re not paying too much. Especially if you have excellent credit, as you’ll likely qualify for a much lower insurance rate. Many times, couples buy houses without bundling their auto insurances, or even their home insurance. Now that the paper work has slowed down, and you aren’t in the middle of buying a house, bundling policies can also save you money in the long run.

Taxes

Taxes are another factor in monthly mortgage payments. Property taxes, to be precise. In short, if your property taxes have gone up, your mortgage payment is likely to go up, too. Unfortunately, we don’t always have a lot of control over our property taxes. But you can dispute them if you feel like they’ve gone up an exorbitant amount. The process differs depending on where you live.

You can also look into certain tax breaks homeowners are eligible for, and once again these vary based on where you live. These breaks typically include improvements made to your home, such as upgrading to a more efficient HVAC system. While these tax breaks won’t impact your monthly mortgage payment, they can still save you money.

As you can see, there’s a lot of tidying up one can do with their mortgage. So, if you want to lower your payment, or even pay your mortgage off sooner, there are plenty of ways to make that possible. And once you’ve finished this cleanup, you can move on to cleaning the garage. Or wait until next spring. Either way, if you have any questions, or would like a professional to review your mortgage, a Guardian Home Loan Originator is always ready to answer your call.

*Consult your Guardian Mortgage loan originator for details. Certain terms and restrictions apply. Program available only to qualified borrowers. Program subject to change without notice. Underwriting terms and conditions apply. Loan subject to credit review and approval.

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