5 Ways You Could Get Your Mortgage Payment Lower
The mortgage payment is the biggest monthly bill in the budget of most people. Financial advisors recommend a maximum of 33% of the households’ take home pay be budgeted for this monthly outlay; ideally house payments are left around 25%.
Tough financial periods happen to most of us at some time in our lives. During this challenging economic climate more and more people are struggling to maintain. Many have already lost their dwellings because of the economic struggles our country is facing. Perhaps you have been hit hard by unexpected medical expenses, reduction of income, unemployment or another financial distress, then you might want to look into one of these techniques to make your lower mortgage payment.
If your family has had a decrease of income one of best choices for you is a mortgage modification. During this process the homeowners’ representative contacts the mortgage company and negotiates new terms for the mortgage to make it more affordable for the homeowner. This is a detailed and time consuming process that is best handled by legal professionals. You may be tempted to work at getting your mortgage payment lower via a loan modification by yourself but you will likely end up frustrated without having gotten anywhere.
Another way to get a lower mortgage interest rate is the refinancing of your current mortgage. Mortgage interest rates are very reasonable right now and are anticipated to stay so for several months. If you owed $200,000 a 1% drop would reduce your mortgage $250 a month. A $150,000 debt, with a 1% decrease in the interest rate, would make your mortgage payment lower by about $100. There are some upfront costs but by shopping around you can minimize your application fees and closing costs. Also the savings you will experience will pay for the cost of refinancing eventually. However, this method of getting your mortgage payment lower is more practical for those planning on living in their home for enough time for the monthly savings to pay off.
Another option is downsizing, finding a smaller and less costly house. Often you can locate a less expensive home that is the size of your current house if you are willing to live without some amenities or in a less prestigious area. It is possible you will have to do some maintenance work or sprucing up but good deals can be found. Think about moving to a suburb if you reside close to the heart of a metropolitan area since land values are often lower there.
Some people have decided to purchase multi-family housing and live in a part of it while renting the rest. For example, a duplex would let you to live in one side and lease the other which could help with the monthly mortgage payment. Once you have built some equity you could sell the property and move into a single family home. This option can be thought more an investment and, depending on the market, the lease you charge could lower your mortgage payment.
This could seem like a contradiction, still it is worth mentioning: Pay extra toward your loan each chance you get. As all extra payments go straight toward the principal it reduces the overall amount you owe. Because your mortgage insurance is based on the principal you still owe, as you pay on your mortgage your insurance premium goes down. Another advantage to paying more than the minimum and consistently on time is that loan companies are more agreeable about working with you if you experience a financial problem and need to skip a month or want to apply for a loan modification.
The majority of mortgages are 30 year loans. Make sure your due diligence is comprehensive and you are getting the best deal on the market regardless of which option you choose to make your mortgage payment lower. Choose wisely and you may be saving tens of thousands of dollars over the life of your mortgage.