How to Lower Your Monthly Mortgage Payment
Refinance your loan., Remove your private mortgage insurance., Explore federal loan modification options.
Step-by-Step Guide
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Step 1: Refinance your loan.
The most common way to reduce monthly mortgage payments in the U.S. is to refinance your loan, or reduce your interest rate and change the length of your term payout.When you refinance, you are essentially replacing the existing loan with a new one.
A new loan with a lower interest rate will help reduce your monthly payments.
Refinancing can come with hefty processing fees and additional interest-rate costs.
Be sure that you won’t end up spending more money over time. -
Step 2: Remove your private mortgage insurance.
If your down payment on your home in the U.S. was less than 20%, then you are paying for private mortgage insurance, or PMI.
PMI protects the lender from losing money in the event of foreclosure.
These yearly fees can range between
0.3% and
1.5% of the original loan.When your mortgage payment falls below 80% of your home’s appraised value, you can request that your lender remove the fee, thereby reducing your monthly payments.You can also pay your PMI upfront.
Talk to your lender about paying this fee upon closing instead of paying it off in increments., If you are having serious financial difficulties in the U.S., you may be eligible to receive help from the Home Affordable Modification Program (HAMP) or from other federal loan modification organizations.
Your lender can help you reach out and apply to the particular programs for which you are eligible.
It is best to save this option as a last resort, however, as you will have better odds receiving federal assistance if you have tried other options, such as refinancing or recasting, before submitting your application. -
Step 3: Explore federal loan modification options.
Detailed Guide
The most common way to reduce monthly mortgage payments in the U.S. is to refinance your loan, or reduce your interest rate and change the length of your term payout.When you refinance, you are essentially replacing the existing loan with a new one.
A new loan with a lower interest rate will help reduce your monthly payments.
Refinancing can come with hefty processing fees and additional interest-rate costs.
Be sure that you won’t end up spending more money over time.
If your down payment on your home in the U.S. was less than 20%, then you are paying for private mortgage insurance, or PMI.
PMI protects the lender from losing money in the event of foreclosure.
These yearly fees can range between
0.3% and
1.5% of the original loan.When your mortgage payment falls below 80% of your home’s appraised value, you can request that your lender remove the fee, thereby reducing your monthly payments.You can also pay your PMI upfront.
Talk to your lender about paying this fee upon closing instead of paying it off in increments., If you are having serious financial difficulties in the U.S., you may be eligible to receive help from the Home Affordable Modification Program (HAMP) or from other federal loan modification organizations.
Your lender can help you reach out and apply to the particular programs for which you are eligible.
It is best to save this option as a last resort, however, as you will have better odds receiving federal assistance if you have tried other options, such as refinancing or recasting, before submitting your application.
About the Author
Kimberly Gray
Dedicated to helping readers learn new skills in crafts and beyond.
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