13 Ways to Lower Your Mortgage Payment

If a large part of your income is consumed by the payment of your mortgage loan then you may be facing problems in meeting the expenses of your day-to-day needs. In this situation, it becomes necessary to find ways to reduce your mortgage payment. In this write-up, we are discussing 13 WAYS TO LOWER YOUR MORTGAGE PAYMENT to help you in this regard.

REFINANCE YOUR MORTGAGE: You can lower the rate of interest, as well as the amount to be paid every month, to a considerable level by refinancing your mortgage. To know how much you can save by refinancing your mortgage you can use a calculator. To refinance your mortgage you must have a good credit score.

EXTEND THE TERM OF REPAYMENT: You can opt for extending the term of the mortgage to lower its payment if you do not want to refinance your loan. For instance, if you extend your mortgage for 15 years to 30 years then extending the time to repay the loan can certainly lower the amount of repaying it.

DROP PMI: If you have made a down payment of less than 20% of the total cost of the property while purchasing it then along with regular payment of the mortgage you will have to pay the premium of the insurance of private mortgage. You can save hundreds of thousands of dollars from the total cost of your mortgage by getting rid of PMI. You can drop your PMI by requesting your lender in this regard.

MAKE A DOWN PAYMENT OF A LARGER AMOUNT: You can lower the monthly installment of the mortgage by making a down payment of a larger amount while buying it. Though 20% of the total cost of a property is considered as an ideal down payment but if you can afford you can increase the down payment to lower the repayment of the mortgage.

OPT FOR AN INTEREST-ONLY MORTGAGE: Some of the lenders can offer interest-only mortgages so that you need not start paying back your balance instantly. You can repay your interest-only mortgage in two phases. In the first phase, you will have to pay only the interest on the mortgage for a specific time and in the next phase, you will repay interest as well as the principal balance.

HAVE TAX ASSESSMENT OF YOUR HOME REDONE: A considerable amount of the monthly payment of mortgage can be taken away by property tax if there is an escrow on your home loan. In almost every country the property tax is based on the assessment of tax on the worth of the property. This tax can be higher if the property is overvalued. You can file a request as a homeowner with the Board of Equalization of your state to assess your property again. You can reduce the payment of the mortgage if the reassessment of the property tax is approved.

RENT OUT A PART OF YOUR HOME: You can greatly reduce the payment of your mortgage by having a tenant if you have some space spare in your home. The rent paid by the tenant can be used to repay your mortgage.

PAY YOUR PMI IN ADVANCE: You can pay the premium of PMI in advance to reduce the mortgage payment if you are unable to make a down payment of nearly 20% of the total cost of the house. You can pay PMI as a one-time fee to avoid paying extra payment for several years. You must be able to cover the insurance of the mortgage if you cannot make a down payment of up to 20% of the total cost of the property.

MAKE ONE PAYMENT EXTRA EVERY YEAR: You can also reduce the payment of mortgage just by paying an additional installment every year along with the scheduled payments. In this way you will be prepaying your loan. By making the payment of only one more installment you can considerably reduce the term of your entire loan. You can reduce mortgage payments by refinancing your loan after a few years.

CHOOSE FROM FEDERAL LOAN MODIFICATION PROGRAMS: If you want to reduce your mortgage payment to meet your financial problems then you can choose from the loan modification programs offered by federal government through your lender. But to eligible to reduce your long-term or short term mortgage payment you will have to meet certain requirements.

ENTER A MORTGAGE PAYMENT PLAN OF BI-WEEKLY: This plan will also allow you to make an extra monthly payment per year. When you make a mortgage payment after every second week instead of every month then you will be paying 26 bi-weekly payments which is equivalent to the payment for 13 full months. You can refinance your loan after a few years to reduce the mortgage payment

MOVE TO A LESS EXPENSIVE HOME: If you plan to sell your house because you cannot afford t live in it then a feasible option can be to move to some other house that you can afford to live in. If your income does not allow you to stay in a house that can lead to sleepless nights and headaches then you can buy a less expensive house after selling the existing one away. You can also rent an affordable house and invest the proceedings in some profitable venture to earn more money. To sell your existing house you can use the services of a reputed real estate commission agency in your city.

ROUND UP THE MORTGAGE PAYMENT EVERY MONTH: When the monthly payment of mortgage is due then you should round it up to the hundred dollars, nearest to it. For instance, if you have to pay $1350 every month then you can round it up to $1400 just by adding fifty dollars more to it. It will help you in reducing your principal balance as the lender will credit the additional deposit to it. It will allow you to save money along with reducing the length of the loan. After some time you can refinance your loan to reduce the payment of the mortgage every month.

Thus, the tips discussed in this write-up can help you to reduce your mortgage payments effectively.