Are You Paying Too Much on Your Mortgage? X Ways to Reduce Your Monthly Mortgage Payments
There are several ways you can lower the cost of your mortgage when you first take out a mortgage loan. For instance, you can shop around for the best rates, purchase when interest rates are low, or make a higher down payment.
But even when you have a mortgage in place, there are several ways in which you can potentially reduce the cost of your mortgage.
If you think you’re paying too much for your mortgage, here are four ways you can go about reducing your monthly payments.
1. Look into Refinancing Your Mortgage
You could reduce your monthly mortgage payments by refinancing your mortgage. That means taking out a new loan with another mortgage lender in place of your existing loan.
For instance, you could choose loanDepot and save a lot.
If you have good credit, you could save even more.
And if you refinance when interest rates are low, you could make substantial savings on your monthly payments.
2. Extend Your Loan Term
Another option is to extend your loan term, which refers to the amount of time you have to pay off your mortgage loan.
By extending the duration of your loan, you can not only lower your monthly payments. You can also gain additional monthly cash flow.
For example, if your current loan balance is $250,000 and you have eighteen years left on your loan and an interest rate of 3.25%, your current monthly repayments will be around $1,530.
If you extend your loan period to thirty years at the same 3.25% interest rate, your new monthly payments would be around $1,088.
That means you can gain an additional $442 each month.
If you have a low-interest rate, extending your loan term can be a great option for reducing your monthly mortgage payments.
You could end up paying a higher amount of interest in the long run, but with substantial savings to be made each month, it can often be more than worth it.
3. Get Rid of Your Private Mortgage Insurance
You’re probably paying private mortgage insurance, which is more commonly known as PMI, if you purchased your property with a down payment of less than 20%.
Paying mortgage insurance on top of your regular monthly mortgage loan payments can add up to thousands of dollars over the entire duration of your loan.
However, once you have made enough repayments and you have at least 20% equity in your property, you can choose to get rid of your PMI, and therefore reduce your monthly costs.
Simply contact your mortgage lender to start the ball rolling.
Your lender will probably need to assign an appraiser to verify how much equity you have in your home. Once approved, your PMI can be removed and your monthly payments will be lowered.
4. Rent Out Part of Your Property
Lastly, a slightly more out-of-the-box approach that can work wonders for helping you reduce your monthly mortgage payments is to rent out part of your home.
If you have a spare bedroom or a basement, for instance, consider renting it out to a trusted tenant.
By getting a few hundred dollars in rent each month, you won’t have to find as much money on a monthly basis to pay for your mortgage and you can have extra cash in your hand.
You could then spend that extra cash on things like improving the exterior design details of your home to make it unique and increase its value.
Image source: https://unsplash.com/photos/1sCXwVoqKAw