Buying a new home is always one of the most exhilarating experiences, however, it is also an experience that does not come quite often and can burn a massive hole in your pocket. Therefore, the first few steps that you take towards buying your new home need to be careful ones, measuring the pros and cons well so as to not suffer major setbacks at later stages, especially where finances are concerned. If you have been eyeing some new residential projects in borivali, then it is also a good idea to understand mortgage payments and how you can bring about a reduction in the same so that your pockets can breathe a sigh of relief. Given below are some extremely crucial tips that will give you valuable insights into the mortgage system and how you can make the most of your mortgage and pay much lesser than what you may have expected.
1. Bring about a reduction in your PMI:
Usually, there is a certain percentage of money that needs to be paid as down payment when you decide to purchase a home. Ideally, this amounts to nearly 20% of your entire cost of buying the home. Usually, it is a good idea to pay as much money as you can as down payment as it reduces the burden of future instalments. However, if for some reason you have been unable to meet this minimum requirement, you may have to bear extra expenses, especially in the form of PMI. You may not realize it, but this can push the cost of your home much higher. However, there are ways to counter this problem, one of them being bringing your PMI down. For this, it is crucial that you earn 20% equity for your home by repaying the initial mortgage. Once you have done this, you can then get in touch with your lender to learn more about bringing down the PMI. This can take a little time as the 20% equity needs to be verified before the PMI rates can be brought down.
2. Mortgage refinancing can work in your benefit:
There are several factors that need to be considered before you take the plunge and decide to refinance, but the two most important ones that you cannot, under any circumstance, afford to ignore are:
i.How long is the term of your loan?
ii.Do you know about the possible difference between the rate of interest that you are currently paying and that in the future?
It is a known fact that when you take a mortgage, you first need to pay off the interest and once that has been taken care of, you then need to move to the principal amount. Therefore, if your mortgage is good as new, you must consider refinancing so that it reduces the financial burden. However, refinancing your mortgage is a very sensitive subject and the difference of even a few decimal points in the interest rate can make a whole world of difference. Therefore, when looking for new residential projects in borivali and considering financing for the same, it is best to consult and research well.
3. Pay your loan for a longer period of time:
Usually, people opt for the 15 month or 20 month loan repayment option. However, this can cause an immense amount of financial burden, especially if unexpected expenses arise. This can cause severe tension and therefore, a better option would be to rely on a 30 month loan repayment so that you can comfortably pay off your loan without too much hassle. However, you need to take note that in doing so, you may have to pay a higher interest amount.
Matthew Pierre is an estate agent helping prospective clients to find the best new residential projects in borivali. He has been working in this industry for over 10 years now and has a very strong educational background in the concerned field.