A Few Ways To Make Your Mortgage Payment Lower

Posted on March 28, 2009
Filed Under Mortgage | Leave a Comment

The mortgage payment is the largest ongoing expense in the budget of most people. Financial advisors suggest a maximum of thirty-three percent of the households’ take home pay be budgeted for this monthly expense; ideally mortgage payments are left around 25%.

Tough financial times happen to most of us at some point in our lives. In the midst of this tough economic climate even more people are struggling to maintain. Too many have already lost their homes because of the economic struggles our country is facing. Those of you that have been affected by unexpected medical bills, reduced income, unemployment or another financial problem, then you may want to look into one of these techniques to make your mortgage payment lower.

If your family has experienced a cut in pay one of best options for you is a loan modification. During this process the borrowers’ representative contacts the mortgage company and discusses new terms for the loan to make it more affordable for the borrower. 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 through a loan modification by yourself but you will probably wind up frustrated without having gotten anywhere.

Another method to get a lower house payment is the refinancing of your existing loan. Interest rates are very reasonable right now and are expected to stay so for a good while. If you owed $200,000 a 1% drop would reduce your mortgage $250 a month. A $150,000 refinanced, with a 1% decrease in the interest rate, would make your mortgage payment lower by approximately $100. There are some upfront costs but if you shop around you should be able to minimize your application fees and closing costs. Also the savings you get will far out weigh the expense of refinancing eventually. One should note that this technique of getting your mortgage payment lower is best for people who plan to live in their home for enough time for the monthly savings to pay off.

Another option is downsizing, getting a smaller and less costly home. Sometimes you can find a less expensive home that matches the size of your existing home if you are willing to live without some amenities or in a less prestigious area. It is possible you will have to perform some maintenance work or sprucing up but the bargains can be found. Consider a suburb if you reside close to the middle of a metropolitan area since land values are often lower there.

Some people have chosen to purchase multi-family housing to live in a part of it while renting the rest. For example, a duplex would let you to live in one unit and rent the other which could contribute to the monthly loan payment. In time you could sell the duplex and move into a single family home. This option can be viewed more an investment and, depending on the market, the rent you charge may lower your mortgage payment.

This may seem like a contradiction, still it is worth listing: Pay extra on your loan every opportunity you get. As all extra payments go straight toward the principal it reduces the total amount you owe. Since your mortgage insurance is based on the principal you still owe, as you pay on your loan 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 payment or want to apply for a loan modification.

The majority of mortgages are thirty-year loans. Make certain your due diligence is complete and you are receiving the best deal available regardless of which option you pick to make your mortgage payment lower. Choose wisely and you may realize a savings of tens of thousands of dollars throughout the life of your loan.

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