Published December 6, 2024
How to Avoid Overextending Yourself with Mortgage Payments
For many homeowners, balancing monthly expenses while keeping up with mortgage payments can feel overwhelming. Did you know that 37.2% of homeowners spend more than 30% of their gross income on housing costs? If this resonates with you, you’re not alone.
As a real estate professional, one of my top priorities is helping buyers make informed financial decisions to avoid overextending themselves. Here are some practical strategies to ease the financial burden and regain control of your budget:
1. Drop PMI (Private Mortgage Insurance)
If your mortgage balance is 80% or less of your home’s original value, or you’ve reached the midpoint of your loan term, you might qualify to cancel your private mortgage insurance. Contact your lender to explore this option – eliminating PMI can save you hundreds of dollars annually!
2. Review Your Spending
It’s time to take a close look at your monthly expenses. Are there areas where you can cut back? Simple changes, like dining out less, canceling unused subscriptions, or reducing entertainment costs, can make a noticeable impact on your budget.
3. House Hack Your Way to Savings
Get creative with your property! Renting out a spare room, parking spot, or even a separate suite can bring in additional income to offset your housing costs. It’s a simple way to turn your home into a source of extra cash.
4. Boost Your Income
While it may take extra effort, finding ways to increase your income can help. Whether you ask for a raise, start a side hustle (like pet sitting on Rover or freelancing), or invest in learning new skills through online courses, these actions can create long-term financial stability.
5. Refinance Your Mortgage
If interest rates drop below your current rate, refinancing might be a great option to lower your monthly payments and save money over time. Speak with your lender to determine if refinancing is a good fit for you.
