If you are having trouble paying your bills every month, you are not alone. Even though the media says we are in recovery mode with the economy ask yourself if your economy is better. I would guess your answer would be “No”. It’s hard to find ways to cut back on expenses. Most family budgets don’t have a lot of wiggle room.

The number one expense all families have is their mortgage or rent payment. It is by far the largest expenditure any family has in their budget. If you are paying rent you can move to a smaller apartment with a smaller rental payment. If you are paying a mortgage it’s a little tougher to reduce that payment but not impossible. Your first thought is, why not refinance your mortgage. But before you go down that road let’s check out some alternatives.

Re-Cast Your Loan

Re-casting your mortgage is just another way of saying re-amortize your loan. If you have a $200,000, 30 year loan at 5% your payment is $1,074. I got this figure using a mortgage-calculator. After three years of making your mortgage payments your principal has dropped to $188,997. It is possible to go to your mortgage lender and ask that the loan be re-cast back to a 30 year term. This would result in a new lower payment of $1,015. A savings of $59 a month. It may be worth asking your lender if they would do this for you. Be ready to pay a fee for this service of at least $250.

If you went the refinance route you would get a reduction in payment that would be a lot more but by re-casting you wouldn’t be paying the new mortgage fees.

Refinance with No Appraisal and save an average of $319 a month at LendingTree.com! Click Here!

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Comparison Shopping Provides the Best Deal

The mortgage rate is going to make a difference in the monthly payment a new homeowner makes. By taking a look around at all of the different rates, a person has the ability to decrease their monthly payment. Everyone, regardless of their situation, wants to save money. Looking for the best numbers is, in a way, looking for the lender that will charge the least amount on the loan.

As consumers are shopping around and focusing solely on the interest rate, it is important to get an accurate idea of what each lender is offering. By using the same information in each of the mortgage calculators, a person can get a clear picture of which one is offering the best deal. For example, use the same home cost and down payment information when looking at each lender.

Comparison Shopping Uncovers Programs and Incentives

While undergoing a Mortgage Rates Comparison, consumers are also exposed to the different benefits and programs that different lenders offer. Some companies may have something set up to help first time homebuyers. Another may have a special incentive that allows a person to let the rate float for an extended amount of time until they are ready to lock in. Because of the cost of the home and the commitment being made, it is important to find every opportunity to save along the way.

Research Before the Commitment

When it comes to mortgage rates, taking the plunge means making a huge financial commitment. A sizeable deposit is required and once the process gets started, backing out could mean losing some, if not all, of that deposit. By taking the time to shop around, there is a chance to make sure that this is the right lender, the right home and the right level of commitment. A decision this big is worth taking the time to research and check into all of the possible options.

Taking on a home mortgage is a big step. In order to make the best decision and get the best deal, it makes sense to look at the different mortgage rates offered by lenders. There are plenty of opportunities to take out a home loan. The trick is making sure that the right loan is chosen before taking the plunge.

Ted Burns is a seasoned home mortgage writer. He has been writing for websites and printed media for more than 15 years. Fred uses several different sources to offer readers advice on the home buying experience as well as tips like the importance of Mortgage Rates Comparison.

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Education Mortgage (Photo credit: StockMonkeys.com)

Today many people are taking advantage of the new Home Affordable Refinance Program (HARP). I recently refinanced my home mortgage and reduced my interest rate by 1%. My new payment is almost $200 less. It’s quite a savings.

When applying for a new mortgage most people just focus on the lower percentage rate and the new payment, but there is more you need to consider. All loans have associated costs and fees included in the closing costs; It’s important to be aware of these costs before you sign on the dotted line.

With all the primary focus on the monthly payment and interest rate the average consumer forget to dive down and ask all the important questions. I have listed 4 questions that I think are important to be aware of before you accept your new mortgage.

How Long does the process take?

It’s important that you find out how long the average time it takes to arrive at closing. You will be asked by the mortgage company during the application process if you want to lock in your mortgage interest rate. You have the choice of locking it in at the time of application or you wait and do it at a later time. Deciding to lock it in depends on the time till closing occurs. If it will be soon then why not lock it in. If the time may be  extended then it may pay to wait and secure a lower interest rate.

This decision all depends on if rates are trending down or up. Waiting may get you a lower rate. But it depends on the time till closing occurs. So knowing this period of time will help you make a better decision.

Do You Have a Prepayment Penalty?

There are some lenders who have written in their mortgage a restriction that charges you a penalty fee if you pay off your loan early or during a particular period of time. This stipulation is included in the mortgage papers to benefit the mortgage provider. It makes sure that you are encouraged to keep the loan a certain period of time to ensure a profit for the mortgage company.

Find out if this stipulation is included in your mortgage papers beforehand,  so you will be able to decide if you can live with this restriction.

If I have to Pay Points on a Loan, How long will it Take to Break Even?

Some people avoid paying points at all costs. But there are those who pay this money so they can get a lower payment. Some may actually need to do this so the payment is affordable. You need to do the math and see if this option is really beneficial and makes sense. To see if paying points is a good idea you need to divide the upfront cost of the points by the amount you are saving monthly with the lower rate.

This will show you how many months it will take you to break even. It will tell you if it is actually worthwhile to do it.

What are all the Costs of Involved in the Loan?

Don’t let the lower interest rate and payment distract you by its overall benefits. You need to get down into the details of your new mortgage. You need to ask your lender, before accepting their offer, what are my costs? What you need to know is the origination fees, discount fees to lower interest, the appraisal, the credit report, administrative fees, document prep fees, closing costs, title insurance, and any other fee the lender charges upfront.

All lenders are compelled by law to furnish you a Good Faith Estimate. This details all out-of-pocket expenses. Carefully examine these costs and  determine if they are reasonable. You can decide if your lender is to high in their fees. If they are too expensive, you can negotiate for a reduction or just find another lender.

A mortgage is a serious contract you are signing up for. You need to ask the right questions at  scottsdale mortgage brokers so you know if it is truly right for you and your situation.

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Interest Rates (Photo credit: 401(K) 2013)

Saving money does not have to be rocket science. Even if you have traditional consumer debt such as a mortgage, auto loan, and credit card debt, you can still save money while paying down those debts. Ask questions, and know your account terms for best results. There are three basic ways that most consumers can save money by asking questions, comparing new rates and understanding their account terms – if you’re in Canada, RateSupermarket.ca is a great comparison resource.

Re-Financing Your Debt

Long term interest rates are at all time lows. If you have a mortgage rate over 5%, chances are, you can do better in a re-finance. In order to take advantage of premium rates, check your credit for dings or mistakes before beginning the mortgage application process. As you enter the process, be certain to ask about fees, rates, and pre-pay penalties structured into your loan. As you consider your options, keep in mind that interest rate savings should outweigh the cost of the re-finance. Keep in mind also that if you are looking to re-locate, refinancing may not be your best move, as the short term savings will get eaten up by fees.

Re-financing an automobile is quite simple when compared to a home. Fees often consist only of a title transfer fee which is typically under $50. Many consumers never consider this option. Explore all options that will save you money such as a reduced interest rate, and reduced loan term. While auto loans typically do not have pre-payment penalties, most people do not systematically pay more on their loan. If you are able to cut your term by re-financing, it may be wise to proceed so that you can pay off your debt quicker.

Credit Card Interest Rates

Many consumers do not know that you can often get your interest rates reduced simply by calling up your credit card company and asking for a lower rate. If you are a student or AARP member, be certain to tell the card issuer, you may qualify for a lower rate simply based on this information. If you hold cards with particularly high interest rates, and the card issuer will not reduce the rate, consider canceling the card once the balance is paid off.

When speaking with your credit card company, ask about interest rates for purchases, as well as for balance transfers. Depending on terms, it may be helpful to transfer the balance on one card to another in order to save interest and pay down the debt quicker. Use caution if you employ this strategy and ensure that you understand when the rates expire, and ensure that your budget lines up with that timeline.

Savings Accounts

Most people have a checking account that they use on a day to day basis. Consider adding a savings account to your banking relationship. Ask about minimum balances for high yield savings accounts as well as interest rates for standard account balances. As with any banking account, ask about any monthly maintenance fees or service charges.

These fees can often erode any interest earned. Some smaller banks and credit unions will offer interest on traditional checking accounts. Depending on terms, it may be wise to consider changing banks in favor of the potential interest to be earned. If you use features such as online banking and bill pay, ask your new bank if they offer these features as well before switching.

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Although it may seem that charge cards and credit cards are the same thing, there are actually distinct differences in the financial transactions they allow. For example, a credit card issuer will not require the user to pay off their entire debt every month – only a minimum payment is required. As long as this minimum payment is met by a specific date, then there will be no late payment fees. Whatever is left to pay on the account is subject to interest. However when it comes to charge cards, there is no spending limit.

The History of Charge Cards

The first ever charge card was issued by Western Union in 1942, and it was accompanied by a new form of paper documentation at the time. Shortly after, department stores also introduced the revolutionary new way of paying for goods, however unlike the Western Union cards, store cards had spending limits. With the help of Diners Club, charge cards were introduced into the travel and entertainment sectors, and the amount of stores that the cards could be used in increased dramatically

From authorizing each transaction to chasing up collections, Diners Club were responsible for the cost of setting up the card account, and this allowed smaller stores to compete in the lending credit market with the big stores. American Express finally entered the charge card market in 1957, and was also the first credit company to provide users with the iconic plastic credit card we see today. Recently however, the price of your mortgage could be affected by the debt incurred by charge cards.

Using Charge Cards

One of the best things about charge cards is that they let the user pay for purchases over time, with American Express offering a service that extends the payment period for items over $200. Furthermore, if these expenditures are travel related payments, then the user could benefit from reduced interest fees.

Although many people believe that charge cards have no spending limit, it’s more true to say that this limit changes over time – usually from month to month. This limit will be based on the user’s previous payment history, the amount of the payments and the how frequently they use the card. Worryingly however, mortgages lenders are now evaluating loan applications on charge card history, whereas when charge cards were first introduced, applications for mortgages were rarely affected.

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Fixed Loan Rate

The interest rate offered with a fixed rate loan will depend largely on your credit score and history. However, traditional fixed loans often have a higher rate than variable mortgage rates and will reflect the average fixed rates for credit products in the market at the time you apply for your loan. Make sure your credit reports are as clean as possible before you apply for a fixed loan to improve your chances at getting approval and a decent rate offer.

If you qualify for a loan backed by the U.S. Department of Veterans Affairs, known as a VA mortgage, or one backed by the U.S. Department of Housing and Urban Development, commonly called an FHA mortgage, you may see very little difference in interest between the fixed and variable rate offers. VA and FHA loans are backed by the federal government and have specific rules and interest rate calculation procedures that lenders must use.

Your total mortgage payment may still change even if you have a fixed loan if you have an escrow account. An escrow is an account in which you deposit money throughout the year to cover some housing bills, such as property taxes and homeowners insurance. If your escrow payment is part of your total mortgage payment, your total bill may change if your escrow items go up or down.

Variable Mortgage Rates

Rates on a traditional variable mortgage are often lower than you’d receive on a fixed-rate loan but only for the promotional or early loan period, before the reset. The period before the reset can be as little as six months or as long as a year or two. When the interest rate resets, your rate can double or even triple, depending on the market rates at the time and the maximum rate cap on your loan.

For example, if your loan has a 4 percent interest rate but the maximum cap is 15 percent, your rate can go as high as 15 percent when you hit the reset. How high your rate will go depends on various factors including financial market conditions and the formula your lender uses for rate calculation.

If you’re only planning on having your loan for a short period of time, a variable mortgage can save you money with its lower rate. However, you must be able to pay off or refinance the loan before the reset to realize the savings.

Anna is an experienced real estate writer. She has been writing for websites and printed media for more than 10 years and has written extensively on the mortgage industry, including and both fixed and variable mortgage rates.

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