Despite of the fact that the housing market looks like rebounding, we are still a part of dubious times and people are more watchful about how much they are actually spending on daily necessities. If you able to manage your grocery budget, cut down the heating costs, consolidate credit card debt and also get rid of the subscriptions you hardly use, then only you get to enjoy considerable savings each month.
Your mortgage payment is also another place where you are probably making unnecessary spending without even realizing it – the amount of money you could save will surely be of great help to stretch your budget to accelerate the growth of your savings account. If you really feel that your monthly mortgage is on a higher side then following are some of the ways that will help reduce your mortgage payments.
If you are facing financial crisis and you are interested in reducing your mortgage payments, you can choose from federal loan modification programs. Such programs can also be available with your lenders and there are certain eligibility requirements you need to meet in order to reduce your mortgage payments.
If you are really looking to save money on your mortgage, then you can also go for ‘refinancing’. Once you reduce your rate, you can actually lower your monthly payments and above all you can save on interest payments as well. Make sure you are aware of the fact that there are costs linked with the refinancing; therefore you have to be sure you have saved enough so that you easily cover the refinancing fees.
If you can then extending your repayment term can be a great option. The best is thing is that you don’t need to refinance your mortgage, your lender will offer you this service and you just need to pay a fee of around $250. Let us assume you have 30-year mortgage and you have extended to 40-year mortgage, the mortgage payment on a monthly basis will come down considerably, since you have stretched your term and you will have sufficient time to payback your loan.
If your down payment is below 20%, then you probably need to pay PMI (private mortgage insurance). However, you can get your insurance canceled by making an appeal to your lender once your mortgage balance goes under 80% of your home’s audited value. Such situation can take place if the value of your home has surged or you may have repaid some of the principal.
If you are still looking for your dream home, it is important to put down more down payments in order to keep the monthly mortgage low. It is advisable to at least put down a minimum of 20%, if you are not in a hurry, try to set aside even more if you can. If you have put down more on your home, you will end up reducing the mortgage. If you decide to put down a minimum of 20%, you will save the payment made on your mortgage insurance which will help you to save significant amount of money as well.
If your home loan has collateral, there are high probabilities your property tax may consume most of your mortgage payments each month. The property taxes are mainly dependent on each county’s tax assessment of what exactly is the worth of your land or home. There are some houses, especially in the urban areas, which are overvalued causing the taxes to be on the higher side. An assessment is somewhat different from an appraisal since it is done by the county mainly for the taxing reasons only.
As a homeowner, you have the right to make an appeal for the assessment to be done again or you can choose to protest by filing with your respective county. In the case where your approval gets approved, your homeowner’s taxes will come down along with the monthly mortgage payments.
When you get a mortgage, some lenders don’t require you to start making the payments immediately and will offer you interest-loan only. When it comes to Interest-only mortgages, it occurs in two phases – the first phase deals with the interest you need to pay on your mortgage and second phase is where you make the payments for actual principal along with the interest.
Let us assume you have 30-year mortgage then spend the initial five years in paying your interest; you will feel your monthly payment quite low, but at the same time you have to pay off the remaining mortgage in the remaining 25 years. Interest-only mortgages are the best way to bring down the mortgage payments.
If you have one or two rooms vacant in your home, renting out to somebody in need can really help in cutting down the cost of your monthly mortgage payments. If you have a room vacant in your basement or maybe a bedroom then you can rent out that space to a friend or a tenant who can pay you the rent each month. Even if it is mere $300, that will surely come handy in lowering your mortgage payment considerably if you are not considering refinancing or any other options just yet.
If you want to see your mortgage payments decrease later than instantly, then it is advisable you make additional payments on your mortgage each month. Just like every debt with an interest rate, when you put more towards the principal balance, the sooner you are able to pay off the debt and in the meantime your extra payments will come handy in reducing what you owe in the time to come and lower your mortgage payments.
So, if you are in a position to make double payments each month for a year, you will end up lowering your principle balance of your loan and there are chances that you get to enjoy more equity in your home as well.
Related Read: 5 Little-Known Ways Your Partner Can Ruin Your Credit