CHICAGO – Bills, bills, bills. We’ve all got them and some of them are bigger than others. For many of us, our biggest bill is our mortgage.
In a FOX 32 money saver special report, Dawn Hasbrouck takes a look at some ways to make your mortgage payment more manageable.
“Just when you think rates have reached a certain point then there could be an increase. They also dip. It’s keeping you on your toes right now,” said Gabe Gomez, a home lending advisor at Chase Bank.
Even in a year full of interest rate ups and downs, one strategy he likes to offer homeowners to make their monthly mortgage more manageable is to split it up into two payments.
“That’s also allowing you to do a couple of things. You’re making biweekly payments so that you would make 26 payments throughout the year. That’s an extra payment per year. That’s going to allow you to save interest over the term of the loan and also pay the loan quicker,” Gomez said.
He estimates that move could cut four or five years off the length of your loan.
“That could be quite a bit of money depending on the loan size that you carry,” he said.
It can also save you some money by eliminating your private mortgage insurance (PMI) quicker.
“That could save you a couple hundred dollars a month on your payment,” Gomez said.
Don’t worry if you haven’t heard about this strategy before.
“I think it’s something new that’s starting to come up and I do get questions on it from clients,” Gomez said.
Gomez says you also need to check with your lender to make sure they offer of bi-weekly mortgage payments.
“One of the biggest things is knowing when your payment is due,” he said.
You might have more time to pay this bill than you think.
“A lot of people think my payment is due on the first of the month. It may be on the first of the month but most lenders – you want to check with your lender – will allow you to pay your mortgage all the way to the 15th,” Gomez said.
“A lot of people actually don’t know that and they’re surprised when I tell them you have until the 15th to pay your mortgage,” he added.
But again, check with your lender and read your statement to see if you have that option.
“You may have what’s called an escrow account with your mortgage,” said Kari Beyer, director of the Anti-Predatory Lending Database and Investigations at the Division of Banking for the Illinois Department of Financial and Professional Regulation.
“That means your mortgage company is collecting each month to pay your taxes and insurance as well as making payments toward the loan,” she said.
Beyer said you could wind up with some extra cash if you compare your escrow account with your property tax bill.
“If they are collecting too much money, sometimes then they will send you a refund when they do the analysis,” Beyer explained.
“At the end of the 12-month period, I have seen refunds that are over $1,000,” she said.
While most lenders do a required analysis on a yearly basis, Beyer says you can ask them to do it sooner. Just be aware of any upcoming changes with your insurance or taxes.
“There are some scammers out there and it’s important to make sure when dealing with your mortgage you are not being offered something that’s too good to be true,” Beyer said.
She said you can see if a company is a licensed mortgage lender by looking them up on the state’s website.
If a company is licensed in another state or by the federal government, you can check them out on the Nationwide Mortgage Licensing System.
“We have received reports there has been unlicensed activity, so I think it’s important to be careful,” she said.
If you are thinking about making bi-weekly mortgage payments, some experts say it’s important to make sure you have an emergency fund for home repairs before doing so.
If you are struggling to make your mortgage payments, contact your lender to see what options they offer.