Have you made your New Year’s resolutions for 2017 yet? The start of a new year is a popular time to make them. What are New Year’s resolutions? They’re promises made to yourself to better yourself in the new year. Time.com lists the Top 10 Commonly Broken New Year’s Resolutions:
- Lose weight and get fit
- Quit smoking
- Learn something new
- Eat healthier and diet
- Get out of debt and save money
- Spend more time with family
- Travel to new places
- Be less stressed
- Drink less
6 New Year’s Resolutions for Homeowners
Those are great promises to resolve to do, but if you’re a homeowner, add these to your list. These resolutions will save you money and make the selling or buying process easier.
Shorten the term of your mortgage
Put extra money toward your mortgage every month. The more you pay in a shorter period of time, the less you’ll end up paying in the long run.
For example, let’s say you have a $150,000 mortgage with a 30-year term at an interest rate of 5.5 percent. Your monthly mortgage payment (principal and interest) would be $852. Paying just an additional $71 each month would shorten that 30-year term by five years and one month. It would also cut the interest down by $30,789. Amazing, right?
Pay off a second mortgage
Paying off a second mortgage is well worth the challenge. Freedom from debt and interest is one of the greatest resolutions to discipline yourself to keep.
Put an extra $100, $200 or $400 toward your home equity loan every month, instead of spending it on something else. The more consistent and disciplined you are to pay off a second mortgage, the better off you are.
And if your second loan has a variable rate, you could get socked with a painful payment increase if interest rates rise. And what if you’re not in a position to refinance that debt? Uh-oh or ouch!
Lock in a low, fixed rate
There are a couple of great reasons to refinance your home loan:
- Lock in a low, fixed rate, especially if your loan has a variable rate
- Decrease your monthly mortgage payment
If the only thing you do in the new year is change a variable mortgage into a fixed mortgage, you’ve done yourself a huge favor financially. Even if you end up with a higher payment, a fixed rate will save you from an increase in your interest rate in the future.
Here’s another scenario to help explain: On a $200,000 mortgage with a 30-year term and a variable rate starting at 3.5 percent, your monthly principal and interest add up to $898. If you refinanced that loan with a fixed rate of 5 percent, your monthly principal and interest add up to $1,073, an additional $175 a month. But what if the variable rate jumped way up to 7.5 percent? Your monthly principal and interest would now add up to $1,389 which is an additional $491 per month. You can see the benefit of locking in the extra $175 in 2017. It might be difficult, but paying an extra $491 in the future could be harder to accomplish than an extra $175 each month.
Challenge your property tax assessment
Has your home declined in value in recent years? If you answered, “Yes,” you might be able to save some money in 2017. Challenge your property tax assessment.
Review your property tax and request a hearing date within the required time if the assessed value is excessive. I will help you with comparable sales data for an appeal.
If your property values drop by 40 percent, your taxes should drop by 40 percent, too. The savings can be substantial, about $1,500 a year on average.
Earn a discount or lower quote on homeowners insurance
Major repairs or improvements that you made to your home this past year can earn you a discount or a lower quote on the new year’s coverage.
A new roof, updated electrical and plumbing, for examples, are preventive home maintenance which will save you money. Insurers appreciate the money home maintenance will save you and are usually willing to give you a discount or lower quote on your homeowners insurance. Call your agent today and update your file with them. Find out whether or not you qualify for a discount or lower quote on your homeowners insurance policy. You might be very glad you did!
Take steps to improve your credit rating
Paying off debts and paying your bills on time will strengthen your credit score. The higher your credit score, the more likely lenders are to lend you money at a lower interest rate and on more attractive terms.
If you’ve missed a few mortgage payments this year, resolve to get and stay current as soon as possible.
Poor credit is not a forever thing. The longer you remain current and on time with your bills after being late, the more your FICO score will improve. Lenders pay attention to current behavior. Older credit problems count for less with lenders.
Do you want to save money or make the selling or buying process easier in 2017? Add these New Year’s resolutions to your list. Then contact me, Charles D’Alessandro, your Brooklyn real estate agent with Fillmore Real Estate at (718) 253-9700 ext. 206 or email [email protected] today. I can answer your questions and help you figure out how much money you’ll save by keeping these homeowner promises in 2017.