Consumer Advocate: Three ways to save on mortgage payments
Gone are the days of haggling for a home, as it's a seller’s market in Southern New England.
“Homes are selling very quickly, and if they're priced right and if they're clean and staged, they're selling as soon as the first day on market,” said Emilio DiSpirito, a realtor.
DiSpirito said inventory has reached a record low in Rhode Island and sellers often juggle multiple offers.
“We've been selling homes sometimes for $5,000 or $10,000 or even $15,000 over asking price,” said DiSpirito.
To make matters worse, interest rates are rising -- almost half a percentage point since the start of 2018.
It all adds up to a heftier mortgage.
“We can only expect them to go up from here,” said Derek Gregoire, owner of SHP Financial, who’s been tracking interest rates.
Gregoire shares three ways to save thousands on your mortgage.
ONE: Start with a sizable down payment.
“If you have 20 percent down, as opposed to 10, you save on the PMI insurance,” said Gregoire. “You're financing less and your monthly payment is less over time.”
TWO: If you can swing it, go for a 15-year mortgage. If you can't, pretend like you did.
“You can treat your 30-year loan like a 15-year and just make extra payments every year, as if you had a 15-year note,” said Gregoire.
THREE: Ask your bank if you can make half payments every two weeks. Depending on your interest rate, you can knock off up to eight years of payments over the life of a 30-year loan.
“You might think in your head, if I'm paying every two weeks, half of what my normal mortgage is, it's going to be the same right? Because there's only four weeks in a month,” said Gregoire. “But when you put that through a year, you actually make a full extra payment -- you make 13 total payments instead of 12.”
If you're thinking of waiting for the market to cool off, it could be a while.
DiSpirito said economists project Rhode Island home prices could increase by nine percent by the end of 2018. The federal reserve has already announced it plans to raise interest rates again.
So, no pressure, but if you want to buy a house, experts suggest doing it sooner rather than later.