
A mortgage payment is made up of several components. The total payment made each month can be broken down into principal, interest, and escrow. The principal figure is the amount of the loan, or the purchase price. The interest is the amount added to the principal and is determined by the interest rate attached to the loan. And, the escrow portion of a house payment represents the portion of money paid that is held back for payment of real estate taxes and homeowner’s insurance. Not all mortgage loans include an escrow provision, and if yours does not then you are responsible for making the annual payments outside of your mortgage.
The interest amount of your house payment is not only tied to the interest rate, but also depends on the principal balance. This is because the interest rate is charged on the outstanding principal balance, so if you are able to get a reduction in the principal due on your mortgage you will pay less in interest. Here are some ways you can reduce the principal balance on your house loan:
● Send in extra payments and direct your lender to apply the payment to the principal balance.
● Make a lump sum payment a few times a year, when a bonus or other financial windfall comes your way, and ask that the lump sum be paid to the outstanding principal balance.
● Modify your loan, so the principal amount is less.
If you are interested in a modification to reduce the principal due on your mortgage, let us help. Most mortgage modifications involve a reduction in interest rate, but it is also possible to get your lender to agree to a reduction in the principal due. This process is a bit more complex, but not impossible. If you want to save money on your house each month, pay off your mortgage faster, pay less in principal or interest, a modification may be the answer you need. Another good way to save on your total house debt is to check on the PMI portion of your payment. PMI is private mortgage insurance that lenders require you to carry, and pay for as part of your house payment, until the amount you owe is less than 80% of the value of your home. So if your home has increased in value, this could be a possibility for you. We have experience in all of these scenarios, and look forward to talking them over with you soon.
For more information about how we can help you, contact us today at www.DsouzaLegalGroup.com. We will go over the facts of your case and let you you’re your next step.