When people discuss their finances, they rarely include their homes. They tend to forget that a house is just as much an investment as stocks and bonds, and a mortgage is a financial instrument that needs occasional fine-tuning. Here are some steps to improve your home’s fiscal fitness:

 

1. Make an extra mortgage payment. Paying a few extra dollars each month can shave years off your mortgage. Not only will you own the place free and clear sooner, but you’ll also save a bundle in interest. Make 13 payments a year instead of 12, and you’ll cut your loan just about in half. Even adding $25-$50 a month can make a significant difference. Keep good records, though, and make sure your lender credits the extra money to principal, not your escrow account.

2. Check your credit history. You never know when an opportunity to refinance or to move up to a better place might present itself, so it’s wise to keep tabs on your credit. Mistakes often take months to correct. But if you check your files annually you can spot errors early and take care of them before they prevent you from improving your position.

3. Cancel PMI. If your down payment was less than 20 percent of the price of your home, you are no doubt paying for private mortgage insurance (PMI) to protect your lender in case you default. You should be able to get rid of your PMI coverage once you pay your loan down to 75-80 percent of its current value. You may have to pay for an up-to-date appraisal to prove your home’s worth, but the savings is worth the cost of the appraisal. Speak with your lender for specifics.

4. Watch loan rates, house prices. Just because you already own a home doesn’t mean you should forget about mortgage rates and housing values. Even if you’re not considering a move, you should pay attention to market conditions so that you will know when it’s time to consider refinancing, canceling PMI, or perhaps selling to put your fiscal house in order.

5. Check your property tax assessment. The records of local tax authorities are often riddled with misinformation. You may be living in a 4-bedroom, 2.5-bath Colonial on a quarter-acre, but the tax assessor might have you in a 5-bedroom place with 4 baths on 4 acres. Mathematical errors are rampant, too. If you catch a mistake, it will save you money, not just this year but for years to come.

6. Check your ARM adjustment. If you have an adjustable rate mortgage (ARM), make certain your lender calculates changes in your rate and/or payment in accordance with your loan documents. Don’t just take the lender’s word for it. Make sure the lender uses the correct index and bases the shift on the index at the proper time. Also be sure the lender adds in the proper margin. And make sure the rules are followed regarding rounding off.

7. Check your escrow. Lenders cannot hold more than two months’ worth of extra insurance and tax payments plus $50 in escrow on your behalf. If you allow your lender to hold more, you are losing interest as well as control over part of your finances. 

8. Watch your energy efficiency. Spending more than you should to heat and cool your home is like burning money in your fireplace. Change your furnace and air conditioning filters annually, and clean them every month. Also caulk and weather-strip around your windows, doors and other places where the outside air can infiltrate your home’s protective barrier.

9. Inspect your utility rates. Are you paying more than necessary for water, electricity, heat and phone service? Most utilities have a wide array of rate plans, so be sure your rate is as low as possible.

10. Check your hazard insurance. Annual savings may be available by switching to a higher deductible. Also look for discounts for nonsmokers, alarm systems and proximity to police and fire departments. 

Source: realtor.com® 

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