Lower your mortgage costs

The average 30-year mortgage rate dropped to a record 3.31 % in November, according to Freddie Mac. The 15-year rate fell to 2.63 %, also the lowest on record.

The interest rate for a 30-year fixed mortgage was 3.43 % in first week of April 2013, down from 3.54 %, McLean, Virginia-based Freddie Mac (FMCC) said in recent news. The average 15- year rate dropped to 2.65 % from 2.74 %.Therefore that certainly suggests that the historical interest rates are going down day by day. Theyare in line with happiness of the borrowers seeking mortgages. Are they really getting the benefits of the lower interest rates but?

What is a mortgage contract?

A mortgage is a contract and private lender is a for-profit business. The fact is that the borrowers are paying exactly what they have signed under the contract instead of the current rate which is declining. If the fixed rate of mortgage is selected as contract, the interest rate does not affect with the index. The person who has signed it has to take the responsibility to pay off the higher interest rates to claim the rightful possession of the house under mortgage. He would have certainly take benefits when the market interest rates were higher and his interest rates were fixed as per the contract.

What are the steps to reduce the mortgage costs?

Following are the possible steps to reduce the mortgage costs:

Lease cheaply

More often than not people think mortgage is the only option to have a house in spite of paying huge interest rates by singing the fixed interest mortgage and then worrying for the lower current market rate. People shall in fact try and find out the rental schemes going on nearby areas. The rental payments may be cheaper and allowed in tax calculations as deductions. The deals in leasing could be quite interesting though not the long term investment.

What is mortgage refinancing contract?

The mortgage refinancing is switching from one mortgage scheme to other scheme to save the costs of the mortgage or avoid falling in the faulty lender's hands. Refinancing could be enforced by the government or influenced self by borrowers or sometimes with the relief provided by lenders. It certainly shows that the original scheme of mortgage has failed to satisfy the borrower's needs.

Why not to try Offset Mortgages?

If the customer has savings, then he can link his savings or current account to his mortgage personal loan which could save him thousands of dollars in mortgage interest or reduce the whole mortgage term. He can still access his savings when he need to from the current account but he won't pay tax on them as the current accountdoes not earn interest. Usually people with fixed income can operate such kind of current account to handle the mortgage dues.

What could happen if mortgage is not paid?

The borrower rightfully misses the ownership of the house and in fact falls in trap of debts. The secured debts are not heard in the bankruptcy. The person may take the shelter of the government funding or debt relief services but again once in debt is always in debt. Coming out of it would be thoroughly difficult for them.