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How Can I Lower Monthly Mortgage Payment Without Refinancing?
Homeownership has become increasingly expensive over the last few years. In fact, according to the National Association of Realtors, homeowners paid 1.5 trillion dollars in mortgage interest payments between 2005 and 2014.
Even though home prices have risen, many homeowners find themselves underwater on their mortgages. This means that even with a 20% down payment, they owe more than their house is worth.
If you’re facing high monthly mortgage payments, you may be able to lower your payments without refinancing. But how do you go about lowering your payments? What should you consider before making any changes? And how will you know whether or not it was a smart move?
I’ll answer these questions and more in this article.
How To Lower Your Mortgage Payment Without Refinancing
Refinancing your mortgage is a common strategy used by homeowners who want to pay less each month. But refinancing can be complicated, especially if you’re trying to save money while maintaining a low monthly payment.
Ways to Lower Monthly Mortgage Payments Without Refinancing
Several options are available to homeowners who wish to lower their mortgage payments without refinancing. Below you will learn several ways of lowering your monthly mortgage payment without refinancing.
Request a Loan Modification
Loan modifications are a common option for homeowners having trouble making payments. While refinancing is typically seen as a better choice, it does require a large upfront fee. Plus, it can sometimes take months to complete.
Instead, consider requesting a loan modification. Several loan modifications are available, including short sale, forbearance, and deferment. Each type offers benefits over traditional refinancing options.
For example, short sales allow borrowers to sell their homes while still keeping their mortgages. With a short sale, lenders agree to accept less money than the full amount owed on the property. As a result, the homeowner avoids foreclosure and keeps his or her equity in the house.
On the other hand, forbearance temporarily allows borrowers to stop paying their mortgages. During this period, the lender agrees to hold off on collecting the outstanding balance until the borrower’s financial situation improves. Once the borrower can repay the entire amount owed, he or she can resume making payments.
Deferring payments is another option. Borrowers can request that their interest rates remain low for several years. When the term ends, the lender will begin charging the borrower’s usual interest rate.
While each of these options requires a separate application, they can provide relief to struggling homeowners.
Appeal Your Property Taxes
Property taxes include general real estate tax, special assessment, and school district tax.
Each type of tax varies based on location, so it’s important to understand the nuances of each type of tax.
For example, general real estate taxes are typically paid annually, while special assessments are usually paid quarterly. School district taxes vary depending on the type of school district you live in.
It’s also important to consider whether you qualify for a homestead exemption. Homestead exemptions are available in certain states, exempting a portion of your home value from taxation. These exemptions can save you thousands of dollars over a decade.
To learn more about property taxes, visit the IRS website. You can find detailed explanations of each type of tax and how to appeal your property taxes.
Cancel Your Mortgage Insurance
Mortgage insurance (MI) is required when you buy a home, and it protects lenders against losses caused by borrowers who default on their loans. MI premiums are calculated based on the amount borrowed, the interest rate, and other factors.
While it might seem like a hassle to pay for MI every month, it’s a smart investment. Considering the potential costs associated with foreclosure, paying off your mortgage early could save you thousands of dollars.
To cancel your MI, contact your lender directly. Some lenders offer automatic cancellation options, while others require you to submit paperwork. Check with your lender to learn more about canceling your MI.
Shop Around for Cheaper Homeowners Insurance
Homeowners insurance is expensive, especially if you haven’t had it. But there are ways to save money on your policy without having to refinance your home loan. Here are three tips to consider:
1. Shop around for cheaper homeowners’ insurance rates. Most companies offer discounts for bundling your homeowner’s insurance with other services, like credit cards or auto policies. Make sure to shop around for quotes from different insurers to compare prices.
2. Ask your current insurer if they offer a discount for paying off your mortgage early. Some lenders offer incentives to pay off your mortgage sooner rather than later.
3. Consider refinancing your existing mortgage into a shorter term. Refinancing your mortgage could result in savings on interest payments. And since you’d still own the same house, you wouldn’t lose anything by doing it.
Recast Your Mortgage
One of the biggest reasons homeowners refinance is to lower their interest rates. But while refinancing can save money over the long term, it can also cost you money in the short term.
Refinancing involves paying off your existing loan with a new one, which could result in additional fees. These fees can add up fast, especially if you’re trying to pay down debt faster.
Consider recasting your current mortgage into a fixed-rate loan to avoid unnecessary costs. With a fixed-rate loan, you lock in your interest rate for a set period, usually three years. Then, after that time, your payments remain the same until you choose to renew your contract.
This type of loan is ideal for homeowners who plan to stay put for several years. And since you aren’t locked into a variable rate, you can rest easy knowing that your payments won’t fluctuate based on market conditions.
While a fixed-rate loan might seem expensive upfront, you’ll save money in the long run. Plus, you’ll still enjoy the benefits of refinancing, including lowering your interest rate and potentially reducing your monthly payments.
Mortgage Recast Explained
Mortgage recasts are refinancing options available to homeowners who wish to refinance their current home loan into a different type of loan. These loans allow borrowers to change the terms of their existing mortgages, including interest rates, payment amounts, and other features.
To qualify for a mortgage recast, borrowers must meet certain requirements set forth by lenders. First, they must have a qualifying property worth $500,000 or less. Second, they must have a credit score of 620 or higher.
Third, they must have no late payments on their previous loan. Fourth, they must have paid down at least 20% of their home’s total value. Finally, they must have had their loan serviced by Chase Bank since January 1st, 2017.
Homeowners who qualify for a mortgage recast can receive a variety of benefits. For example, they can lower their monthly payments by paying off their existing loan sooner or extending the length of their loan. Additionally, they can combine their outstanding debt into one loan, lowering the overall cost of their mortgage.
When to Consider a Mortgage Recast
Mortgage recasts happen when lenders change interest rates or other terms of a loan after origination. When deciding whether to recast your mortgage, there are several factors to consider.
For example, if you’re planning to refinance your home, you might want to wait until the market picks up again. Or maybe you’d rather pay off your existing mortgage faster, so you could save money on monthly payments. Whatever your reason, it’s always smart to weigh your options before deciding.
Ways to lower your total interest cost without refinancing
Make One Extra Payment Per Year
One of the biggest mistakes homeowners make is paying too much monthly money on their mortgage.
When you refinance, you typically pay less than you would if you made monthly payments.
You still end up spending more over the life of your loan.
To avoid this problem, consider making one extra payment per year instead of monthly. This strategy saves you thousands of dollars while keeping your home ownership intact.
Here’s how it works: Let’s say you currently owe $200,000 on your house and plan to make monthly payments of $1,500. Instead, you make just one extra monthly payment ($1,500). Over ten years, this change could save you $15,000 in interest costs.
Enter a Bi-Weekly Mortgage Payment Plan
There are several different types of mortgages available today. Some loans offer fixed rates, while others allow borrowers to choose from variable rates. There are also options for monthly, bi-weekly, and even weekly payments.
One option that is becoming increasingly popular is a bi-weekly mortgage. With a bi-weekly mortgage, you pay two installments each month instead of just one. This allows you to spread out your payments over a shorter period, saving money on interest charges.
Lenders require that you have enough cash flow to cover both monthly payments to qualify for a bi-weekly mortgage loan. So if you currently have a $1,000 balance on your home, you would need to save $500 every other week to afford the extra payment.
This type of mortgage is ideal for homeowners who can maintain consistent monthly savings. But remember, bi-weekly payments aren’t always cheaper than traditional monthly payments. They could end up costing you more in the long run.
So if you’re considering entering into a bi-weekly mortgage plan, here are three questions to ask yourself: How much am I paying now? What will my monthly payments be after the refinance? And how much will I save? If you answer yes to all three questions, then consider taking advantage of a bi-weekly mortgage program.
Round Up Your Mortgage Payment Each Month
One of the homeowners’ biggest monthly expenses is paying off their home loans. While it might seem like a large sum of money, it’s just a fraction of the overall value of your property. So instead of focusing on the monthly payments, focus on the long-term benefits of owning your own home.
For example, if you could pay $500 extra each month over ten years, you’d save yourself $50,000. And while that sounds like a lot of money, it would still only amount to less than 1% of the current market value of your house.
So instead of worrying about the monthly payments, try thinking about the bigger picture. Focus on the long-term benefits that come along with owning your own home.
In conclusion, if you have a mortgage, chances are you’re looking for ways to lower your monthly payment without refinancing. Fortunately, there are many options available to homeowners like you.