Your monthly mortgage payment has the potential to become a serious financial burden, especially if your circumstances change suddenly. Knowing how to lower your mortgage payment each month helps you keep control of your cash flow. Here are five simple ways to make a big change.
Avoid Private Mortgage Insurance
Lenders may insist you pay private mortgage insurance (PMI). This happens if your down payment is less than 20 percent, or if your equity is less than 20 percent when you refinance. Commonly, PMI premiums are added to the monthly mortgage payments and increase the overall cost of the loan. Paying a larger down payment reduces how much you borrow, while also reducing your monthly PMI premium.
If you have to pay PMI, you may have the option of paying an up-front premium. This reduces your monthly payments — but if you refinance, you may not be able to recover the premium you paid.
Repair Your Credit Rating
Having a good credit score usually means lenders offer better terms, and they may also reduce PMI rates. Before you start comparing loans, take steps to pay down debt and ensure your credit history is as healthy as possible.
If you already have a mortgage and need to reduce your monthly payments, you may want to consider re-amortizing. For a small charge, your lender extends the payment term on your existing mortgage. This reduces your monthly payments, but also increases the overall cost of the mortgage, as you pay interest over a longer period.
If you’ve built up equity in your property, saved some money, or paid down debt, consider refinancing. This is often a worthwhile option, as you pay off your existing mortgage in full and set up a new one based on your current financial position. It may be possible to extend your payment period, reduce or eliminate PMI, or negotiate other favorable terms.
It’s also possible to use a cash-out refinance loan to draw on the value of your equity as a cash sum. While this won’t reduce monthly payments, it does provide extra money to pay off credit cards and other loans. In this way, you free up more cash to ease the burden of monthly bills.
Let Refi Help
Knowing how to lower your mortgage payment is only half the battle. If you decide to refinance your mortgage, you need to search for lenders with products that match your needs.Refi’s loan validation and matching service makes the process much easier. Complete the online loan inquiry request today, and take the first step in taking control of your monthly payments.