Ralph Moss Limited

SMART MONEY MOVES

Strategies to save on mortgage costs.

There's money to be saved when you renew your home mortgage. Or if you're saddled with a five-year term at a high interest rate, the savings can come sooner. Consider these strategies:

• Shop around for the lowest possible rate. -
  Competition for mortgage loans is fierce. In order to get or retain your business, financial institutions may be willing to cut as much as half a point (half of one percent) off a five-year term and a quarte rpoint off a one-year term.
• Reduce your amortization.
  Your monthly payments will be larger, but you'll save an amazing amount on interest cost.
• Make a lump sum payment.
  There's no limit on the amount of principal you can pay down when you renew. Use whatever cash you have available to pay off as much as you can.
• Switch from monthly to weekly payments.
  The effect is similar to making 13 monthly payments each year
• .Consider a blended-rate renewal
  A blended renewal extends your mortgage beyond the existing term at a rate that averages what you're paying with current rates. If your existing rate is quite high, and current rates are much lower, the savings could be substantial.
  For example, suppose you owe $100,000 on an original five-year term at 9.5%. There are two years remaining to the ends of the term. Today's five-year rate is 8.5% A blended renewal rate would fix your rate at 9% for the next five years.
  You'd get a lower rate for the next two years and protection against rate increases for the following three years. The risk, however, is that two years from now the rate may be less - not more -than the 9% you're paying now.

YOUR MOVE. Shop and compare. Visit several financial institutions in person. Calculate costs carefully since the arithmetic is different in every case and saving opportunities change with changing interest rates.