Michigan Home Loan Expert Explains Common Mistake Homeowners Make

Almost a Third of Homeowners are Making this Mistake. Michigan Home Loan Expert Explains.

Do you know what your mortgage rate is? If not, you may be losing thousands of dollars.

According to new data from Bankrate, which surveyed 1,330 US homeowners, 29 percent of these homeowners have no clue what they are paying in interest or they would not say.

It is imperative that you fully understand your loan terms and know what your interest rate is as just the slightest change in rates can cost you several thousands of dollars over time.

For example, a $200,000 home at 3 percent means you will pay about about $82,843 in interest over a 30-year fixed-rate mortgage. Just a slight rate increase up to 4 percent will cost you over $32,000 more in interest.

This is especially true for homeowners with an ARM (adjustable rate mortgage) because the rate is always fluctuating depending on the current housing market. And with mortgage rates increasingly rising, many homeowners with adjustable rates are switching to fixed rates.

Another way homeowners can save a significant about of money is by opting for a 15-year mortgage instead of 30 years. Why? Interest rates on a 15-year fixed-rate mortgage will typically run lower than a 30-year fixed-rate mortgage. Couple that with the fact that you are paying interest for a less amount of time – making you mortgage free sooner.

However, a 15-year mortgage isn’t the right choice for everyone. While the lower interest rate and loan term saves homeowners in the long run, they will pay a much higher payment each month which can really limit financial flexibility when money is tight. The takeaway: 15-year mortgages will provide long term savings but require more up front. So, if you can afford a higher monthly payment, a 15-year mortgage may make the most sense.

No matter which type of mortgage you choose, it’s crucial to understand your rate. Staying informed will help you determine affordability and if you should opt for a different type of mortgage.

Contact a Michigan Home Loan Expert for More Information

If you are not sure what your rate is, or have questions about changing your loan terms or refinancing, don’t navigate through all of this information on your own. Contact Julie Krumholz from Superior National Bank in Clinton Twp., Michigan. Remember, consulting with a mortgage expert may save you thousands.