Make and Save Money While Financing Your New Home

Setting up your mortgage can sometimes feel confusing and draining, because most people don’t want to end up paying for a mistake they made years ago. What many people don’t realize is that if done correctly, financing your new home can actually help you save and make money. In a previous article, we looked at three tips to help set up a proper mortgage. First, it is very helpful to pay off as much debt as you can before you commit to purchasing a home. The more you can pay off now, the less interest payments you’ll be making later. Next, find a bank that you trust. By doing both your personal banking and home financing in one place, you have a better chance of getting a small percentage break on your interest rate. Every discount helps when it comes to one of if not the biggest purchases of your life. Finally, fixed rates offer stable, long term savings on your new home. In this article we’re going to briefly discuss how you can build on these insights to help make you money.

Set Up a 30 Year Mortgage.

There are two common choices when it comes to the length of mortgage contracts for your new home: 15 years and 30 years. Where you might think it would be better to set up a 15 year mortgage, you can actually save more money by setting up a 30 year account. Setting up a 30 year mortgage will stretch your payments out so that your required monthly payment is roughly half that of a 15 year mortgage. Saving money comes into the picture when you take that extra money that you save on your initial payment, and you pay on top of your premium. By having a low payment, but paying extra on the premium, you put more money towards directly paying off the house. If you do this consistently and correctly, you’ll actually be able to pay off your house in roughly 15 years, while paying less money to the bank for interest.

Save and Invest Access Money.

Besides taking some of the money you save on a 30 year fixed rate and paying down on your premium, you can save and invest that money. Many banks and brokerage firms offer return rates of long-term investments of 6-12% percent. Where this might not seem so significant now, if you can save and invest for 15 years, not only will you pay off your mortgage, but you’ll have money in the bank on top of that to do with as you choose.

Mortgaging a new home can be stressful and confusing, but if you follow these tips, you’re on your way to making your money work for you!