How to Lower my Mortgage Payment?

If your mortgage payment is putting a dent on your budget, this is the best time to consider your options in lowering your monthly mortgage payment. There are several ways to lower your monthly payments and below are some of the viable options you can consider.

Mortgage Refinancing

Refinancing your mortgage is one of the direct options you have to lower your mortgage payment. However, it is important to determine whether you should refinance or not based on the following factors: the age of your loan, and the difference of your current with the new interest rate.

The amortization of your home loan is mostly paid to cover the interest during the start of the loan term and the principal near the end of the term. Because of this, the interest rate is most essential during the start of your loan term. The interest rate has less of an effect as you near the end of the term when most of your payments are predominantly for the principal. The bottom line here is that the newer the mortgage is, the better for you to consider refinancing.

But you need to remember that once you decide to refinance your current mortgage, your amortization will return to square one. This would also cost several thousand dollars in closing expenses so a small difference with your current and new interest rate may not be justified if it is only about 0.25%. To make sure you are on the advantage, you may contact your local mortgage broker to see if it’s worth to refinance or just look for other option.

Longer Loan Term

If you are feeling the effects of huge monthly amortization that comes with your 15-year or 20-year mortgage terms, you may opt to extend it into a traditional 30-year term to reduce your monthly payment. However, your interest rate will definitely increase but you can still choose to make extra payments on your mortgage just like with your 15-to-20-year loan term. These additional payments will help you complete your loan repayment faster without compelling you to make hefty payments.

There are lots of financial relief programs you can avail to lower your monthly payments on your mortgage. However, every option you have has its own pros and cons and it is best to really evaluate each one based on your current financial condition. Contact your local broker now and learn of other options you have to lower your mortgage payment.