Posts Tagged renovations
10 Simple Ideas to Save Money on your Mortgage
Posted by Top Home Loans in Mortgage Advice, Mortgage News on August 18, 2010
Everyone wants to have the lowest mortgage rate or pay the least amount of money to the bank in interest, but there are other ways to save money when it comes to your mortgage. Below are a list of several ways that you can implement right now:
1. Buy a smaller house, and you will pay a lot less in mortgage interest because your principle balance will be smaller.
2. Buy and Sell your houses without using a real estate agent. They are helpful, but if you want to save money, then they won’t be helpful to achieve savings.
3. Avoid extra fees. Many times banks will charge renewal fees, appraisal fees, signing fees, etc. Try to pay as little of these fees as possible.
4. Pay weekly instead of monthly. This does have a small, significant impact on how quickly you will pay off your mortgage.
5. Limit renovations until your mortgage is paid in full. Don’t do unnecessary renovations until all your debt is paid.
6. Live on the cheap. Do not purchase luxury goods until you have paid off all your debt including your mortgage. Live as inexpensively as possible.
7. Turn the heat down and the air conditioning up. By consuming less energy, then you will be able to save money on your electricity bills.
8. Increase your mortgage payments regularly, and make lump sum payments when you have the capital to.
9. Pay off all your high interest debt as soon as possible. Do not refinance unless you have little options. Refinancing should not be done frequently.
10. Sell excess goods. You don’t really need that much stuff. Just focus on what is essential and get rid of the rest of the stuff you don’t need.
Living cheap is one of the best ways to become rich. Make sure that you save as much as possible and as frequently as possible, and you will have your mortgage paid off in no time.
How did you pay off your mortgage? What was the primary lifestyle change you made to pay off your mortgage? Leave your response in the comments below.
Save your Mortgage from the Bank. Simply Mortgages can Help!
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The Economy and your Mortgage; it will Hurt you more than You Think
Posted by Top Home Loans in Economy, General Banking on July 13, 2010
Lately, there has been a lot of talk of a double dip recession or a major pull back in the stock market. The truth is this isn’t happening as much as the media would like you to think, and the economy continues to recover at a reliable pace. What does that mean to me though? How will the economic recovery help me with my mortgage?
Mike is a home owner and has been one for the past four years. He loves his house and makes no plans on moving. He has been investing money in renovations for his house to improve the property value. Mike has a 35 year amortization on his mortgage, and he can meet the payments each month. After, five years, his mortgage comes up for renewal. The bank sends him a list of possible terms with higher payments. The lowest one is approximately 50% higher than what he was paying before. Mike becomes excited and very scared. How could the bank increase his monthly payment by so much? How does the bank expect Mike to be able to pay this increased monthly payments? How can Mike make ends meet? Mike was fortunate. He called his bank, and they refinanced his mortgage term into something that was more affordable for him. How can we prepare for something like this?
When the economy recovers, a few things change that change your standard of living. The first thing is that bond rates and GIC rates increase. This means that you will be able to get a better rate of savings on your investment accounts. The second finance engine that changes is the stock market. As the stock market rises, your long-term investments will increase in value. As the investments increase in value, then you should receive more and more money.
The other thing that changes is interest rates. Interest rates increase and increase with the economy until the market stops rising. As the market dips into recession, then mortgage rates fall. If you catch mortgage rates at the bottom of a market cycle, and your mortgage renews at the top of the stock market cycle, then this can have disastrous effects. How can you stop your monthly payment from becoming unaffected?
Refinancing is the best solution. It allows you to take advantage of low interest rates and reduces your payments. You may be able to consolidate all your monthly payments into one payment and decrease the amortization on your mortgage. You may not be able to change to economy; however, you can manipulate how it affects you.
How are you preparing for higher mortgage rates? Do you think the economy will continue to recover? Leave your answer in the comments below.
Save your Mortgage from the Bank. Simply Mortgages can Help!
Your Mortgage will Never be Paid; How much Mortgage Interest are you Paying?
Posted by Top Home Loans in General Banking, Mortgage Advice, Mortgage News on June 26, 2010
Believe it or not, you could be paying up to 368% the price of the property you purchased. This means that you are paying almost 4 times the purchase price for your house.
Paying off mortgage interest is one of the biggest expenses of your life. Even though the rates on a mortgage can appear to be quite low, the amount of interest that you pay over the course of your mortgage is quite substantial. Even if you have the best mortgage rate, you still could be paying several times more interest than principle against your mortgage.
For example, let’s say you buy a car, and instead of paying it over the usual five years, you decide to pay it over 35 years. In this case, you would end up paying $27,481 in interest on a $20,000 vehicle. That means that you would have to pay more than double to purchase the car. A car that retails for $20,000, you would be paying $47,481. That is almost 150% higher than the cars actual cost. With cars and other material goods, this is absurd; however, in home ownership, the market allows for these absurd prices.
Let’s look at an average $400,000 property in Toronto.
Here are the details of your mortgage:
- Purchase Price: $400,000
- Down Payment: $20,000 (5% down payment)
- CMHC Fees: $11,970
- Land Transfer Taxes: $8,200
- Closing Costs: $8,000
Mortgage Terms:
- Total Mortgage Amount: $392,000
- Amortization: 35 Years
- Payments: $2,216/month
- Interest paid per month: $1,936
- Principle paid per month: $280
Interest and Expense Details:
- Interest Paid after 35 years: $538,631
- Total Payments: $930,631
- Total Payments including initial expenses: $966,631
- Total Payments including initial expenses and property taxes: $1,176,631
The property costs almost 300% the initial purchase price, and this is not even taking into account mortgage refinances. The average home owner will refinance their property once every three to four years to pay off debt and renovations. When a home owner does this, they usually add on a few years to their amortization.
Let’s assume that the average home owner refinances 5 times over the course of their mortgage term. Each time they refinance, they add on an additional 3 years to their mortgage term. This means that they will be adding on approximately another 15 years to their mortgage term.
With refinancing, the home owner can expect to pay as much as $833,321 over the course of their mortgage term, and as much as $1,225,321 in total payments. This means that the home owner as much as $1,471,321 for a $400,000 property.
Do you want to pay 368% the listing price of the property you are looking to purchase?