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1159 S. Clayton St. Denver, CO 80210

Denver, CO 80210

How To Lower Your Monthly Mortgage Payment

If you are like most people you want to spend the least amount of money possible on your monthly mortgage. To help keep an eye on costs you should regularly review your current payment and ways to reduce this monthly cost. Contacting a professional loan officer can assist in understanding the options that may help to reduce costs and what would work best based on your situation. We will look at which combination of factors would result in the lowest monthly mortgage payment.

Here are a few options that may help you lower your monthly payment and keep more cash in your pocket:

Refinance your current mortgage

A good way to lower your mortgage is to consider refinancing your current loan. Refinancing is the process of replacing an existing mortgage with a new loan. People often consider refinancing in order to lower their interest rate, extend the time of their loan or change their loan program. Any of these options could result in a lower monthly payment.

Lower your interest rate: Interest rates are the cost of borrowing money and represent what creditors earn for lending you money. There are several broad categories of mortgage loans including conventional, FHA and VA loans. Not every person can qualify for each type of loan and rates can be significantly different depending on what loan type you choose. Also, when you applied for your loan several factors impacted the percentage of interest you paid, one of these was your credit score. If your credit score has since improved, you may get a better interest rate because you are currently seen as less of a risk.

Longer loan term: A simple way to lower your mortgage payment is to extend the term of your loan. While this will cost you more over time, it provides an immediate way to lower your monthly payments. In the future, if you are in a better financial place you can add the amount to your monthly mortgage payment and pay off your loan faster.

Changing from adjustable rate to a fixed-rate mortgage: Interest rates come in two basic types adjustable and fixed. Fixed interest rates don’t change over time, they remain the same for the full term of the loan. Adjustable rates “adjust” throughout the term of the loan. They may have an initial fixed period, after which they go up or down each period based on the market. If you currently have an adjustable interest rate you may want to convert to a fixed rate to provide stability in payments.

Be sure the cumulative savings on your monthly payments is enough to offset the costs of refinancing. If you are looking to move in the next year or two refinancing may not be the best option for your situation.

Stop paying PMI

If you bought your house and provided less than 20 percent of the purchase price as a down payment, you’re probably paying private mortgage insurance (PMI) on top of your regular mortgage payment. PMI is a type of mortgage insurance for conventional loan. PMI protects the lender if the person obtaining the loan stops making payments.

If you originally didn’t have 20 percent to put down on your house, but now have 20 percent equity in your home then you can request that your lender drop your PMI and lower your payment.

Have your home’s tax assessment redone

Your property tax bill is based on the assessed value of your property. Factors such as your property’s size, construction type, age and location can affect your tax bill. Sometimes assessments are too high if the area has been re-zoned, the new zoning has caused home prices to decline, and the declined prices aren’t reflected in the assessment. If you think you’re paying too much in property taxes and your home’s value should be lower than you can appeal the tax assessment with the county where you reside.

Homeowners can protest the assessment by filing a protest with the county or requesting a hearing with the state Board of Equalization. If the protest is approved, the homeowner’s taxes drop, which means that your monthly mortgage payment also drops.

Apply for mortgage forbearance

If you are having a hard time making your monthly mortgage payment you can apply for a mortgage forbearance agreement. With the agreement, the lender agrees to reduce or even suspend your mortgage payments for a certain period of time. You must resume the full mortgage payment at the end of the period, plus pay an additional amount to get current on the missed payments, including principal, interest, taxes and insurance.