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New Home Mortgage Tips


Buying a home comes with a lot of responsibility and there are some tips you can follow to be sure that you are able to make your mortgage payments on time each month so that you will not end up losing your house. If you have a thirty year loan, a fifteen year loan, or even a bad credit mortgage, you will want to understand these tips so that you will be able to stay in your home as long as you need to and not end up in foreclosure. Knowing how to effectively pay off your house could help you to also lower the rate, shorten the term and perhaps pay off the house early, without having to do any mortgage refinancing. If you have the money to make extra payments and it will not hurt you financially, go ahead and make those payments, especially if it is at the beginning of your term. Paying extra will go straight to the principal instead of the interest, and so the extra money could help to cut some years off of the length of the loan. 


In order to help yourself not to pay so much on your loan, you will need to understand how the payments are applied to a home mortgage or mortgage refinance. Interest is a huge part of every payment, even if you started out with a small interest rate. A common ratio is that you end up paying about three times the value of the house, just in interest. You will notice that in the beginning of the loan, most of the money goes towards the interest, and a few dollars go towards the principal. At the end of the loan term, the opposite is true, where the majority of your payment is put on the principal. This is called amortization, which is when the interest is paid first, and the principal is paid off at the end.  


If you can, you could start making bi-monthly payments rather than just one payment each month. This will help to cut some years off of the mortgage, but you will not be paying any extra money because when you pay, it is actually paying for the previous month, so if you pay half of it in there early, it will make a huge difference. Another idea is to always have money for at least one payment saved and put away in the bank so that if you ever have a hard month, you will have that money to fall back on.