Put Your Home to Work for You with These Money Saving Tips
- 3 min
What you'll learn.
- Understanding of our unique system
- See how it can benefit your homebuying experience
- Highlight the perks of a proactive behind-the-scenes process
Being a homeowner certainly comes with its own set of responsibilities! But have you considered the ways you can put your home to work for you to alleviate some of the financial weight of homeownership? Check out these four quick tips for lowering your living costs, reducing monthly expenses, and saving money across the board.
1. Refinance your current mortgage.
The simplest explanation of refinancing is that you are financing your property again. You're repeating the mortgage process you completed when you originally bought your home, only instead of buying a new home, you’re just getting a new loan. This new loan may: - Have a shorter or longer term than you originally had. - Lower your interest rate. - Lower your payment. - Allow access to equity you may have in your home.
Refinancing can help you lower your monthly payment, consolidate existing debt, convert to a fixed-rate mortgage, pay off your mortgage quicker, tap into equity to pay for a major expense, and plan for a secure financial future.
To learn more about refinancing, check out our list of 8 Things You Need to Know When Refinancing!
2. Recast your loan.
Mortgage recasting is when you pay more toward the principal in a lump sum or extra payments to pay off your loan quicker. In some cases, you may be able to recalculate your monthly mortgage payment based on the new, lower loan balance.
To recast your mortgage loan, your monthly payment will be recalculated using your lower loan balance. This means that you will pay less every month, because the principal balance of your loan will be smaller. But it’s important to keep in mind that not all loan types allow for mortgage recasting, such as VA and FHA. Check with your lender or mortgage company to see if your loan type is eligible.
It’s important to note that recasting and refinancing are not the same and they each provide different options to the borrower depending on their loan type and eligibility.
3. Remove mortgage insurance.
Lenders require private mortgage insurance (PMI) on Conventional loan programs to protect themselves against potential loss if you stop making payments. You may be thinking that there must be a way to avoid being responsible for paying insurance premiums on something, hopefully, your lender will never need. And you’re right, there is!
Typically, when a down payment amount is less than 20%, mortgage insurance is required. There are different ways to remove mortgage insurance from the monthly payment after the fact, depending on your financial situation and home’s value. You have options as a borrower when it comes to mortgage insurance and trying to save money, so be sure to talk with your lender about that possibility.
4. Improve your home’s efficiency.
Older homes tend to have outdated pipes and electrical systems. If you like the charm of an older home but want to make sure it will function properly by being more energy-efficient, an Energy Efficient Mortgage might be a great option for you!
Energy efficient mortgages are available for purchase or refinance loans, which allow you to finance energy efficient home improvements or upgrades. And saving money on utility bills adds up over time. For example, you’re not saving on energy costs when the heat in your home escapes through cracks in your windows, your HVAC simply isn’t working properly, or your toilets use too much water when flushed. All those little extra costs add up over time.
If you’re looking to explore options and want to start putting your home to work for you, reaching out to your lender is a great place to start for advice!
Loan programs may change at any time with or without notice. For refinances, the total finance charges may be higher over the life of the loan. Information is for educational purposes only and should not be relied upon by you. Information deemed reliable but not guaranteed. All loans subject to income verification, credit approval and property appraisal. Not a commitment to lend. Atlantic Bay Mortgage Group, L.L.C. NMLS #72043 (nmlsconsumeraccess.org) is an Equal Opportunity Lender. Located at 600 Lynnhaven Parkway Suite 203 Virginia Beach, VA 23452.