Monthly Archives: July 2013

Northwest Arkansas Real Estate: How to Lower Your Mortgage Payment

how to lower your mortgage payment in northwest arkansas

Northwest Arkansas real estate Home Buyer’s Tips

It is common knowledge that a home is one of the highest priced purchases you will likely make in your life and with that comes the highest amount of interest you will ever pay. With this in mind, I am always open to new tips and tricks about the best and smartest ways to economically finance homes for sale in Northwest Arkansas. This is one of those ways…

Lower your monthly mortgage payment by doing a Single-Pay Mortgage Insurance payment. A single-pay mortgage insurance allows a consumer to pay upfront a portion of the mortgage insurance payments at a lower rate.  Generally, a home buyer’s mortgage insurance payment is added into the loan amount and paid out monthly in addition to the original house payment. If you pay up front, the discount is much, much better on the pocketbook over the long haul.

Here is some math to show an average of what you can  save. Say you buy a home for $300,000. The mortgage insurance rate is based off of 70 basis points of your loan amount. For this scenario, that is $175 per month due for mortgage insurance or $2100 a year. This $2100 over 5 years adds up to be $10,500. That is a lot of money, which is also incurring interest alongside your original loan amount.

However, if you choose the single-pay mortgage payment way, you will pay $5250.00 at the time of closing ( single pay method requires 1.75% of loan amount paid at closing). Thus lowering your house payment $175 a month, lowering your overall loan amount, and lowering the ridiculous amount of interest that incurs over the typical life of a mortgage loan.

Buying a home and using the single-pay upfront method, does a few other awesome things for you too! It increases your “buying power” because it now provides you with a lower debt-to-income ratio, a lower monthly mortgage payment, and a lower cost loan.

The only downfall to this method is that you have to fork over the 1.75% (average percent of the loan amount) of the mortgage loan at closing. It does require you save up a little extra cash along with your down payment, but the benefits of this method are just too good to pass up. There are a couple requirements that need to be met in order to do this method.

Requirements for the Single-Pay Mortgage Insurance:

  • Must be on your primary or secondary home financing only
  • Credit score of least 700 or higher
  • Max 45 percent debt-to-income ratio
  • Lender Approval

 

I hope you find this information useful in your home buying journey! If there is anything I can assist you with, contact me anytime! Have a great rest of your week Arkansas!

-Steve Atwell

Buyer’s First Realty of Northwest Arkansas

Arkansas Buyer's Agent

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Phone: (479) 298-3224
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