Getting a lower mortgage payment is a prominent goal but also a big challenge for many homeowners. Many paths to a lower mortgage payment exist, but choosing which one is best for you depends on your current situation.Everyone is constantly striving to lower their mortgage payment and while most focus strictly on lowering their interest rate as the method of accomplishing this, there are several other ways to get a lower mortgage payment and they’re not limited to just getting a lower interest rate. Take a look at the options below to see how you can get a lower mortgage payment.
Lower Your Mortgage Payment By Understanding What’s In It
Mortgage payments contain various elements, including interest, principal, mortgage insurance (MI), homeowners insurance (HOI), and property taxes. Lowering the cost of each of these elements will create large savings for you in getting a lower mortgage payment.
Lowering Interest Rate=Lower Mortgage Payment
Lowering your mortgage interest rate has to be done by way of mortgage refinance. Two different types of interest-reduction refinances exist. One type is the no-cost refinance, which reduces your interest rate without incurring any closing costs. The reduction results in an immediate impact on getting a lower mortgage payment and increasing your monthly savings.
The second type of refinance is a rate-reduction refinance. Closing costs are associated with it, and those costs will need to be calculated into your ROI, so look to get the lowest refinance rate. Determine how much interest you’ll save each month by refinancing, then divide that figure into the total cost of the refinance to learn how many months it will take you to recoup the closing costs. The no-cost refinance is geared toward those who are not planning on staying in their home for more than a few years, whereas the rate-reduction refinance is for people planning on staying in their home at least several more years.
Lower Your Loan Principal and Get a Lower Mortgage Payment
Most homeowners don’t consider the principal portion of the payment as something that can be lowered, but it’s possible. If you truly need to lower your mortgage payment (because you’ve seen a reduction in your cash flow, for example), you can accomplish this by refinancing for the same term or a longer term than the current mortgage length. If you originally took out a 30-year mortgage and you’ve paid on it for 5 years, refinancing for another 30 years will reset your amortization schedule and lower the amount of principal that you’re paying in your monthly payment. This is not advisable for those interested in paying off their homes quickly, but it is another option to get a lower mortgage payment.
Eliminating Mortgage Insurance
Getting rid of mortgage insurance is an obvious option when it comes to getting a lower mortgage payment. Take a look at How to Avoid PMI to learn how you can eliminate your homeowners insurance, or avoid it completely.
Lowering Homeowners Insurance Rates
Are you overpaying for your homeowners insurance? Reference Reduce Your Homeowners Insurance Premium to understand how you can lower your mortgage payment through saving money in your homeowners insurance policy.
Reassessing Property Taxes to Receive a Lower Mortgage Payment
Consider attempting to lower your property taxes. Every local municipality offers an annual opportunity to challenge how one’s property taxes have been calculated. The process can vary state-to-state, but you’ll typically present your case in front of an appeals board, and request a reduction in your equalized value. You’re going to need supporting documentation like a real estate appraisal, or documentation of recent home sales that are similar to your home, or close in proximity. There are also a number of community organizations that offer free seminars on how to make your case for a lower property tax. The best part is that it doesn’t cost you anything to file a dispute, or utilize this process, and there’s also no chance that your property tax will go up as a result. It is a no-venture, no-gain action in your quest to lower your mortgage payment.
Each of the five elements of your mortgage payment can all be reduced in order to get a lower monthly mortgage payment. Contact Homesite Mortgage to assist you in getting a lower mortgage payment with a no-cost rate reduction refinance.