Seems like we all looking for ways to save lately as a result of inflation. What are some quick mortgage tips to free up some cash flow?
Tip #1 - Extend Your Amortization
Extending your amortization won't help you save on interest, but it will help to lower your monthly payments and free up cash flow in a challenging economy. If you have 20% down payment or more for a new purchase or are refinancing your mortgage, you have the option to take up to a 30 year amortization. By taking a longer amortization, you will see a substantial drop in the monthly payment amount. This means it will take more time to payout your mortgage, however could make it less painful during the interim. You always have the option to add a lump sum payment to reduce your amortization at a later date when you are back on track.
Tip #2 - Consolidate Your Debts
For anyone carrying excessive credit card debt or high interest debt, even with a mortgage interest rate in the 5% range, you are still saving substantially by consolidating these high balance debts into your mortgage. Most credit cards charge interest at 19% or higher and lines of credit can run anywhere from 1-5% higher than prime. By consolidating the debts into your mortgage, you will find a larger amount of your monthly income going into your pocket each month. Have your mortgage broker crunch some numbers for you to see if it is worth your while.
“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” – Ayn Rand
Tip #3 - Skip a Payment
Some lenders have the unique option to skip a mortgage payment available. This will allow you put the money on higher interest debt that you have accumulated to help free up monthly cashflow. Check with your mortgage broker to see if this is a option for you and your current mortgage product.
Inflation is a scary term for many, but it doesn't have to be. Practicing good financial management can help put you in a better position both today and long term. Where there's a will, there's a way.