Everyone is having a difficult time in 2020 and lowering your mortgage payment may be a big help. According to Web.com Reviews, a high mortgage payment may trap a lot of your disposable income and restrict you significantly. However, lowering your mortgage payment may result in higher interest, and you need to evaluate your choices carefully. Here’s how you can make your monthly mortgage payment lower:
1. Extend your term– The most straightforward way to lower your mortgage payment is to extend your repayment term. If you want to extend your term, there is no need to refinance your mortgage. Your bank may offer this service for a fee of $200 to $300.
When you increase your mortgage term from 15 to 20 years, your monthly payment decreases since the amount gets stretched over twice the number of years. However, interests also increase, and you end up paying more overall. But that may be the best solution in your current situation since it frees up a lot of cash every month for your daily expenses.
2. Refinancing your mortgage– If you want to avoid the added interest from a term extension, you may consider refinancing your mortgage. If you have what is regarded as a good credit score, you can refinance your loan from a different lender and save a lot of money. Due to the pandemic, mortgage rates are at historic lows, which is an excellent opportunity to save big money.
There are several mortgage refinance calculators available online, and you can use them to calculate the savings you can get from a 1% or 2% reduction in interest rates. You may be pleasantly surprised. If you can get a hold of competitive prices, you can refinance your mortgage within a few weeks.
3.Increase the down payment size – This method is possible only when you are in the market to buy a new home. If you can shell out a large down payment while buying your home, you can keep your monthly payments low. Try to make a down payment of at least 20 percent and increase that percentage if possible.
4. Pay away your PMI– If you have bought your home with less than 20 percent down payment, you may be paying mortgage insurance along with your regular monthly payment. This has the potential of adding tens of thousands of dollars to the overall price of your home. To get rid of your PMI, pay enough of your mortgage to have 20 percent equity.
After that, you can request your lender to remove the PMI. In best cases, they agree without any hassle, and in worst cases, your PMI gets removed after an appraiser gets sent to your home to verify your home’s equity. At the end of it, you would be paying a lower monthly mortgage payment.
Web.com Reviews also suggests you look into other options like an interest-only mortgage where you pay your mortgage in two stages. At first, you pay off the interest, and then you pay the principal. If you can increase your payments after the phase of paying your interests, it works out in your favor.