Feeling the squeeze of your monthly mortgage payment? You’re not alone. In today’s economic climate, many homeowners are looking for ways to lighten their financial load. Luckily, there are several strategies you can employ to lower your mortgage payment and free up some much-needed cash.
Here are 10 effective ways to reduce your monthly mortgage burden:
1 Refinance to a Lower Interest Rate:
This is often the most straightforward way to lower your payment. By securing a lower interest rate, you’ll automatically reduce the amount of interest you pay each month, resulting in a smaller overall payment. However, remember that refinancing comes with closing costs, so make sure the savings justify the switch.
2. Recast Your Mortgage:
This option involves making a lump sum payment towards your principal balance. This will reduce the overall loan amount leading to lower monthly payments. While it requires some upfront cash, it can save you a significant amount of interest over the long run.
3. Eliminate Your Mortgage Insurance (PMI):
If you have a conventional loan with a down payment of less than 20%, you’re likely paying PMI. Once you reach 20% equity in your home, you can request to have PMI removed, which will reduce your monthly payment.
4. Modify Your Loan:
If you’re facing financial hardship, you may be eligible for a loan modification. This involves changing the terms of your loan, such as the interest rate or term, to make your payments more manageable.
5 Lower Your Property Taxes:
Property taxes are a significant portion of your monthly escrow payment. If you believe your property is overvalued, you can appeal your tax assessment to potentially lower your bill.
6. Shop Around for a Lower Homeowners Insurance Rate:
Don’t settle for the first insurance quote you receive. Compare rates from different providers to see if you can find a better deal.
7. Make Bi-Weekly Payments:
Instead of making monthly payments, consider making bi-weekly payments. This essentially means making half your monthly payment every two weeks. Over the course of a year, you’ll end up making one extra payment, which can significantly reduce your principal balance and shorten the life of your loan.
8. Rent Out a Room or Your Entire Home:
If you have extra space, consider renting it out to generate additional income. This can help offset your mortgage payment and make it more manageable.
9. Downsize Your Home:
If your current home is too large for your needs, consider downsizing to a smaller, more affordable property. This can significantly reduce your monthly housing costs.
10. Apply for Mortgage Forbearance:
If you’re facing temporary financial hardship, you may be able to apply for mortgage forbearance. This will allow you to temporarily pause or reduce your payments, giving you some breathing room to get back on your feet.
Remember, there’s no one-size-fits-all solution when it comes to lowering your mortgage payment. The best approach for you will depend on your individual circumstances and financial goals. Carefully consider your options and consult with a financial advisor to determine the best course of action for your situation.
By implementing one or more of these strategies, you can successfully lower your mortgage payment and achieve greater financial freedom.
Use a Streamline Refinance
Another choice is to consider a Streamline Refinance, available on many FHA, VA, and USDA home loans. With a Streamline Refinance, the lender is not obligated to re-check your income, credit, or employment. That means the loan can close much more quickly and possibly avoid a lot of paperwork.
What’s more, with a Streamline Refi, you can skip the home appraisal. It implies that you can refinance even if you have little to no equity in your home and that you can lock in a lower rate than you would with other low-rate refinancing options.
“With a Streamline Refinance, the lender is usually not allowed to add closing costs to the loan balance, and the interest rate and monthly payment must be lowered enough to make it worthwhile for the borrower,” says Eileen Derks, head of mortgages at Laurel Road.
In essence, she says, a streamline refinance enables the borrower to get a lower rate and payment for relatively little money and effort.
Ask about loan modification
As an alternative, if you qualify, you can look into loan modification, which can lengthen the loan’s term and/or reduce its interest rate.
According to Laffey, loan servicers occasionally offer these choices to borrowers in an effort to keep them from going through foreclosure and losing their houses as a result of events that may or may not have been within their control.
You’ll probably need to submit supporting documentation in order to be qualified, such as bank statements, proof of income, proof of hardship, and more.
How to lower your mortgage payment on 30 year fixed loan
FAQ
Is it possible to reduce mortgage payments?
Can mortgage payment be reduced?
Can you ask for a lower mortgage payment?
How can I lower my mortgage payment?
“Canceling mortgage insurance premiums is perhaps the most likely way to lower your total monthly payment in the current market,” said loan officer Jon Meyer. “Although rates are up, so are values,” he adds. Check your PMI removal eligibility with a lender. Start here 3. Extend your loan term
Can a refinance lower my mortgage payment?
A mortgage refinance is often the most direct way to reduce your payment amount, but it’s not your only option. Here are nine ways you can lower your monthly mortgage payment — with or without a refinance. 1. Refinance with a lower interest rate The primary reason homeowners refinance is to lower their mortgage interest rate.
How do I get a lower interest rate?
If a lower interest rate is not immediately available, you can acquire one by buying mortgage discount points. These points, which represent prepaid interest, each amount to 1% of the principal balance and reduce your interest rate by 0.25%. The cost for these points is paid upfront at the time of closing the loan.
Will making an extra mortgage payment lower my monthly payment?
Making an extra mortgage payment won’t lower your monthly payment, but it will cut the total interest you’ll owe over the term of your loan. Making an extra payment every year could result in substantial savings and enable you to pay off your loan before the term ends.