Stop Focusing on Interest Rates! 5 Ways to Lower Your Mortgage

Uh, Patriot Nation Unite, as you're trying to shop for the best rate. What if maybe you've been looking at it the wrong way? What if you've been kind of overlooking everything? There's actually five, that's right, five ways to reduce and get the lowest mortgage payment, and it's not necessarily getting the best rate. Most time it is, but I'm going to show you in this video why sometimes even the lowest rate doesn't get you the lowest payment. It's going to blow your mind. Boom. And if that's of interest to you, hit the like and subscribe. Add some comments if you would. And as always, let's kick off this rodeo right now. Hi folks, I'm Kevin F. I'm the mortgage patriot on your side, nestled here in the Hill Country above San Antonio, Texas, serving all you proud Texans and all you great folks around the country. Another great one. Why? Because as I mentioned earlier, there's five ways, yes, that's five ways to reduce your monthly mortgage payment. And it's not just getting the lowest interest rate. Even the lowest interest rate doesn't guarantee the lowest payment. How is that even possible? Again, I I'll show you that in a in a minute here. But if you would hit the like and subscribe, it really helps bring my content to the forefront. Brings my videos up so that you can you can be educated on them. Here are some of the latest ones I've had. Three credit hacks that most people don't use to help qualify, get you to a point where you can qualify for a loan with your credit scores. The use of buyowns and why you're going to want to try to negotiate for them if you can. Great topic. the best down payment assistance program in Texas. So, there's something for everybody if you go through all the all the archives there. So, let's get into all that content right now. So, to understand how to reduce your monthly mortgage payment, you have to know what the monthly mortgage payment uh components are. Well, guess what? Coincidentally, there's five components to the monthly mortgage payment. And therefore, there are five ways if you examine each one of them, which we're going to do, to potentially reduce each component, thereby reducing the entire monthly mortgage payment. So, what's the first one? The first one is the big one and that's your principal and interest. Principal and interest. The second one is your property taxes. Thirdly, you have property insurance, hazard insurance. Fourthly, you have HOA dues. And lastly, you have monthly mortgage insurance premium or private mortgage insurance premium. I'm going to show you how each one affects your payment. And let's get into all that right now. So, let's do this for illustration purposes. Let's start with an example of a $300,000 first-time home buyer purchase. Okay, that's pretty much the average median price across the country for first-time home buyers. Let's take a rate of 6% in the market right now and let's take assumptions for property taxes, property insurance, HOA dues, and uh private mortgage insurance. In the state of Texas anyway, your state's going to vary, but in the state of Texas, a payment on a $300,000 purchase on an FHA loan today, all five components combined, is going to be about $2,675. $2,675. So, let's do this. Let's attack each component. Let's see how how much we can carve into that uh that payment and reduce it at by the end of this video. Let's go. Right now, let's look at principal and interest first because that's usually the biggest one. And this is highly, you know, correlated to interest rate. And if our example is a 6% market rate right now, let's assume through my shopping because I'm a mortgage broker, not a not a loan officer that's a direct lender, meaning I have access to all these different uh firms right here that you're seeing scrolling through right now. There's over 200 lenders that I have at my disposal. So, for example, this month I a lot of first-time home buyers that I helped enjoyed a 4.99% rate on the first year because I found a certain lender, a great lender that that was doing a free one-year buy down. In either case, I can shop for you. Even the difference between 6% versus 5.875. If I could even reduce your payment by 1/8 on a $300,000 purchase, what's that going to do for your payment? It's going to take you from 2675 to 26.50. So, if we're dropping $25 right out of the gate just by lowering your interest rate just a teeny bit, and I could absolutely do that just by shopping. So, we're off to a good start. Let's go to the second component. Let's look at component number two because it's not a small one. Property taxes. In fact, property taxes has even a bigger impact on the interest rate. And it depends, it's not just a slam dunk. It depends on how you file. For first-time home buyers, you're a primary resident of your home, obviously. So, you file, at least in the state of Texas, and many states have the same thing. It's called homestead, homestead exemption. That's just a category of property taxes, and it but it gives you a big exemption. So, in the example earlier of the payment, the initial payment of $2675, we took it to 26.50 50 by lowering our interest rate in Aid. And now inside of that is $550 a month for property taxes. But if you file for Homestead, that goes from $550 down to $412. That's another reduction of $137. And now your overall payment has dropped from 2675 to $2513. We're really cutting into it right now. So that's how it works. Don't be scared of the property exemption. I can show you how to file for that. Like I said, it's just a quick two-page form. So, let's go on to component number three, hazard insurance. Let's look at the third component of the mortgage payment, and that's uh property insurance or hazard insurance. Yes, you do want to shop that down and shop it hard because it can make a difference, and every dollar counts, right? And so, people are very happy to to shop, but I guess what? I found a very incredible carrier that's been making all my uh home buyers extremely happy. They've been going with their quotes for the last two months exclusively, 100%, even though they've shopped on their own. I present them this quote and they go with it every time. So, in our first example, let's go to the back to the math. $2,675 mortgage payment. Inside of that was a payment of about $216 for home insurance. That's about average in state of Texas. But with this good uh carry that I found, I knocked that down to 175. We're saving another 4140 or so dollars off this. So, now we've gone from $2,675 all the way down to $2,472. So, we're making some serious headway. Let's keep going. Let's see how far we can get this thing. Let me interject real quick on this video to to present this for you. This is a webinar.the mortgage.com. webinar.theort mortgage.com. What is that? That's my ongoing usually about once a month, Thursday evening, first-time home buyers webinar. I go from start to finish. I go from pre-approval all the way to getting your keys. I cover lots of ground, folks. Takes about 50 minutes, but we have actually we have fun, believe it or not. And people are very happy. They they've they learn a ton. And look at some of the things you're going to learn here. How to how to minimize your cash to close, how to get the best down payment assistance program in Texas, how to negotiate your offers or even negotiate once you already under contract. Everything you need to know start to finish. Pre-approval to keys. Sign up for that webinar on the on the next Thursday invitation and I'll see you there. Let's look at component number four to reducing your monthly payment and that is what that is HOA dues or condo dues. Now I will admit this is probably the one that you have the least impact on. In other words, if you definitely want this house, you definitely want to be in this neighborhood and it's got an HOA fee in my example in my math of the 265. I put a $40 HOA fee in there and that's probably standard for about a $300,000 price point in Texas once again. But a lot of people don't want HOA. So, I'm helping you shop for homes and I can find a home that doesn't have an HOA fee. So, if we take out that $40 out of our math, now we've gone from 2675 all the way down to 2472, I believe it was. Let's take out another $40 from that. And what do we have? 2432. So, we keep buying into this payment. But that's one way to do it is just avoid homes, especially here's a spoiler alert. You know, you should know this by now. Try to not buy a condo. I mean, they might start off with the, you condo fees of $100, but four years later, that might be 250. Then 7 years later, it might be 350. I mean, the H the HOA fees, the condo fees, they're all subject to change. And all they do, they never go down, right? They're just only going to go up. So, if you can, you might want to try to avoid that. Let's look at the fifth and final component of reducing your mortgage payment. And what is that? That's mortgage insurance. Well, great. What's mortgage insurance? Well, if you don't put down 20%, the lender is saying basically, hey, I need to be covered because we're giving you quite a bit of the loan here to buy your home. In case you default, we're we're we're out to dry. We're left out to dry. So, they charge in the FHA world 0.55 uh% of the loan amount. So, what does that come to in our example? On a $300,000 purchase, that amount inside of that $2,675 number is going to be $132 for FHA mortgage insurance. Ah, but guess what? And here's where it comes how you can have a higher interest rate and a lower payment. In the conventional world, if you have a high FICO score, meaning something over 720, 740, even 760, your credit score dictates the mortgage insurance payment. So the higher the the the FICO, the lower the mortgage payment. So FHA $132. If you have a 760 score in the conventional world, your mortgage insurance is only $75. What's that difference? That's $56 per month. So ha. So even though you might have a 6.25 conventional rate and a 6% FHA rate, FHA is lower, your mortgage payment is actually lower on the conventional rate because the the MIP payment, the mortgage insurance payment is even is a greater savings than the rate. So that's how you can have a lower interest rate and still not have the lowest payment. So it's all about mortgage insurance. So now what's where's our final payment now? We went from $2,675 to $2,375. We knocked off $300 out of this whole five component of formula here. Chipping away with each one and that's how you want to do it. I can show you how to do it. I'm the mortgage patriot. Go to the webinar.org mortgaggypatriot.com. Join me on Thursday evening. We'll have a great time and you're going to learn a lot. And so I'm hoping to see you there. I'm the mortgage patriot Kevin Fagen on your side as always. Make it a great one. END OF TRANSCRIPT