Whether you’re a first time home owner or not, your mortgage payment is the largest bill you pay each month. Should that be the case, you would likely love to find a way to bring that bill down – even if only by a modest amount. To help you toward that end, we have compiled the following list of ten ways to lower your mortgage payment.
#1 – Refinance
When thinking about how to lower your payment, this is likely the first idea that comes to mind. If you refinance your mortgage, you may be able to secure better terms and a lower payment in the process. Of course, you will need to have good credit at the moment in order to close a refinance loan.
#2 – Make a Big Down Payment
This is only an option if you are still in the process of buying a home. Should you be preparing to buy in the near future, think about using a larger down payment in order to cut down on the size of your monthly payment moving forward.
#3 – Extend the Repayment Term for Your Loan
It is possible that this is the easiest way to lower your payment. If you can extend the term of your loan – say from 15 years to 30 years – you will lower your monthly payment in the process. You obviously will wind up paying more interest over the life of the loan with this plan, but it can offer you short-term payment relief.
#4 – Request a New Tax Assessment
The amount of money that goes into the escrow portion of your mortgage account each month is based on estimated property taxes. If you believe this number if off track, request a new assessment of your property taxes.
#5 – Pay Down the Principle
This is a tactic which is going to pay off in the long run, rather than the short term. If you have the money free in your budget, make extra payments toward your principle to bring down the outstanding balance on the loan. In the long run, interest charges will be saved with this technique.
#6 – Interest-Only Mortgage
Taking out a mortgage which only requires you to pay the interest for a set period of time can save you some money – but just in the short term. Once you have to begin paying back the balance, your monthly payment will increase dramatically.
#7 – Rent Out a Room
If you need help making ends meet each month, you could turn your home into a revenue generator by renting out one of your rooms. This is not legal in all residential areas, however, so check with the appropriate government agency before proceeding.
#8 – Ask for Help
There are federal loan modification programs available which can help people going through a hardship deal with the cost of their mortgage.
#9 – Pay PMI Upfront
Rather than paying your PMI – private mortgage insurance – each month, you do have the option of paying a one-time fee when you take out your loan. This will make closing more expensive, but your mortgage payment amount will be reduced.
#10 – Eliminate PMI
Speaking of private mortgage insurance, you might be able to get rid of your PMI if you have at least 20% equity in your home. If that is the case, request that the PMI be dropped by contacting your lender.