The start of a new year is the most popular time to make New Year’s resolutions. Do you make them? And what do resolutions have to do with homeownership?
What are New Year’s Resolutions?
First, let’s understand what New Year’s resolutions are.
They’re promises you make to yourself to better yourself in the new year. And depending on the kind of promise you make to yourself, they are quite often broken within the first three months of the new year.
- Lose Weight and Get Fit
- Quit Smoking
- Learn Something New
- Eat Healthier and Diet
- Get Out of Debt and Save Money
- Spend More Time with Family
- Travel to New Places
- Be Less Stressed
- Drink Less
Homeowners, Add These to Your List
The resolutions listed above are great for everybody to resolve to do. But if you’re a homeowner, you should add the following to your list.
Why? Because these save homeowners money. And they make the selling or buying process easier when the time to do so comes.
Shorten the term of your mortgage
Put extra money toward your mortgage every month. The more you pay in a shorter period of time, the less you pay in the long run.
For example, let’s say you have a $150,000 mortgage with a 30-year term at an interest rate of 5.5 percent. Your monthly mortgage payment (principal and interest) would be $852. Paying just an additional $71 each month would shorten that 30-year term by five years and one month. It would also cut the interest down by $30,789.
That’s amazing! Right?
Pay off a second mortgage
Pay off a second mortgage. Freedom from debt and interest is one of the greatest resolutions to keep. It takes a lot of discipline, but this is a challenge well worth the effort.
Choose to put an extra $100, $200 or $400 toward your home equity loan every month versus spending it on something else. The more consistent and disciplined you are to pay off a second mortgage, the better off you are.
If your second loan has a variable rate, it’s quite possible you could get socked with a painful payment increase if interest rates rise. And what if you’re not in a position to refinance that debt when that happens? Uh-oh or ouch!
Lock in a low, fixed rate
There are a couple of great reasons to refinance your home loan:
- Lock in a low, fixed rate, especially if your loan has a variable rate
- Decrease your monthly mortgage payment
If the only thing you do in the new year is change a variable mortgage into a fixed mortgage, you’ve done yourself a huge favor financially. (Go back and read that last paragraph in resolution number 2). Even if you end up with a higher payment, a fixed rate will save you from an increase in your interest rate in the future.
Take a look at this scenario.
On a $200,000 mortgage with a 30-year term and a variable rate starting at 3.5 percent, your monthly principal and interest add up to $898. If you refinanced that loan with a fixed rate of 5 percent, your monthly principal and interest add up to $1,073, an additional $175 a month.
But what if the variable rate jumped way up to 7.5 percent? Your monthly principal and interest would now add up to $1,389 which is an additional $491 per month.
You can see the benefit of locking in the extra $175 in 2020, right?
It might be difficult, but paying an extra $491 in the future could be harder to accomplish than an extra $175 each month.
Challenge your property tax assessment
Has your home declined in value in recent years? If you answered, “Yes,” you might be able to save some money in 2020. Challenge your property tax assessment.
Review your property tax and request a hearing date within the required time if the assessed value is excessive. I will help you with comparable sales data for an appeal.
If your property values drop by 40 percent, your taxes should drop by 40 percent, too. The savings can be substantial, about $1,500 a year on average.
Earn a discount or lower quote on homeowners insurance
Major repairs or improvements that you made to your home this past year can earn you a discount or a lower quote on the new year’s coverage.
A new roof, updated electrical and plumbing, for examples, are preventive home maintenance which save you money. Insurers appreciate the money home maintenance saves you; therefore, they are usually willing to give you a discount or lower quote on your homeowners insurance.
Call your agent today and update your file with them. Find out whether or not you qualify for a discount or lower quote on your homeowners insurance policy. You’ll be very glad you did!
Take steps to improve your credit rating
Pay off debts and pay your bills on time. It strengthens your credit score. The higher your credit score, the more likely lenders are to lend you money at a lower interest rate and on more attractive terms.
Did you miss a few mortgage payments this year? Resolve to get and stay current as soon as possible.
Poor credit is not a forever thing. And the longer you remain current and on time with your bills after being late, the more your FICO score will improve. Lenders pay attention to current behavior. Older credit problems count for less with lenders.
Now You’re Ready to Save Money in 2020
New Year’s resolutions are great to make, especially when keeping them saves you money as a homeowner.
Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate with any questions you have about how to save money as a homeowner. Call (718) 253-9600 ext. 206 or email firstname.lastname@example.org today.
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
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SOURCE: Brooklyn Real Estate Blog – Read entire story here.