![]() If your circumstances have changed, however, since securing the original mortgage, it may no longer be required once you refinance. MI protects the lender in case you’re unable to repay the loan. If you have an FHA loan, or a conventional loan, but didn’t have the cash for a 20% down payment when you bought your home, then your loan payment probably includes Mortgage Insurance (MI). Looking for a deeper understanding of refinancing? We’ve demystified how refinancing works. It makes you an appealing customer and financial institutions will compete for your business. The credit score you’ve earned by consistently paying your mortgage and other bills on time also enables you to take advantage of even further options. ![]() And as the home value goes up, that added value also becomes part of your equity - often at a much faster rate. As you pay down the principal, you are contributing to the equity you have in your home. The rest of your payment goes toward the interest accruing on your loan. With 10% down, your loan covers the other 90% of the home’s purchase price.Īs you make loan payments, some of your payment goes toward the principal, or the amount actually borrowed. When you first purchased the home, your down payment established the equity you have in the house. If the value of your home has increased, you can directly benefit through the Loan-to-Value (LTV) ratio used to determine the terms for the loan. Refinancing pays off the old loan and establishes new terms, including the interest rate. While mortgage loans are long-term commitments, refinancing lets you take advantage of market changes to find a loan that better fits your current circumstances. Refinancing gives you an opportunity for a better deal that might extend the term or bring down the interest rate. Do this and you’ll discover compelling strategies to trim your expenses and plan for the future. By breaking it down, you can explore any flexibility you might have with each of its component parts. Many people don’t realize that a mortgage bill is often a combination of several separate expenses. The trick to lowering your mortgage payment is to start by reviewing what is actually included in the bill. As Ben Franklin would say, “a penny saved is a penny earned.” Let’s see how you can save the most, and make Ben proud. Pruning that payment can add cash to your household budget - every month. If you’re like most homeowners, your mortgage payment looms on the calendar as the single largest expense each month.
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