Many Americans love to treat their mortgages like some of their favorite kitchen appliances – they want to “set it and forget it.” Paying close attention to your monthly statement can actually protect you and your family. And using a few simple tricks can actually help you save a significant amount on your monthly expenses.
Say Goodbye to PMI. You may not notice it in the crush of your monthly mortgage statement, but many Americans pay for a line item called PMI. PMI stands for “personal mortgage insurance, and lenders impose it on customers who have less than twenty percent equity in their homes. If you took advantage of a low-money-down offer, the PMI will protect the bank if you go bankrupt. Once your equity has risen above twenty percent, call your lender to cancel the PMI – you no longer need it.
Get Rid of Force Place Insurance. If you ever happen to let your homeowners insurance lapse, your mortgage lender can legally protect their assets by imposing a force-place insurance policy on your account. A force-place insurance policy doesn”t cover the loss of your belongings in case of fire or theft. And you may have to pay about four times as much per month for force-place insurance than you would for the cheapest homeowner”s policy. Keep your homeowner”s insurance current, and notify your lender immediately if you see a line item for force-place insurance on your bill.
Check for Stealth Benefits. A growing number of mortgage lenders have grown some non-traditional revenue by selling other products and services to their clients. Sometimes, you may not realize you”re getting billed for features like roadside assistance or travel agency services when you receive your monthly statement. Scan your bill carefully each month and call your lender to question anything on your bill that looks unfamiliar or unauthorized.
Pay Your Mortgage Every 15 Days. A growing number of homeowners use this trick to shave thousands of dollars in interest off their mortgage expenses. If your mortgage payment is due on the 30th of every month, and your lenders receive your check on the 30th, everything”s running according to schedule. But, if you split your payment up so that they receive half on the 15th and half on the 30th, you no longer have to pay interest on the half-payment you made in the middle of the month. Although your monthly budget stays the same, these little savings can add up to big windfalls over the course of a thirty-year loan.
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