by Dottie Dutton
Many people today find themselves struggling to pay their mortgage payments each month. If you find yourself in this fast growing group it is time to explore ways to to lower your mortgage payment. A lower mortgage payment may make the difference between enjoying all the advantages of home ownership or living a life filled with stress and aggravation.
Here are a few tips on how to lower your monthly mortgage expense.
1- Refinance your home.
This may seem like a no brainer, but there are still countless numbers of homeowners who still have mortgages with interest rates above 5%!. Many of these people barely qualified at the time they bought their homeand feel that because obtaining a mortgage was such an enormous hassle in the first place they just don’t want to go through that process again.
Before you give up, be sure to check your credit score. If you have made your payments on time, you may find that refinancing is a much easier process than you think.
You will have many options when you refinance. Ideally, you will want to keep the same loan term you have remaining. For example, if you originally started with a 30 year mortgage and you have paid on the loanfor 5 year you want to refinance with a 25 year term on your new mortgage.
This helps avoid paying more interest on your mortgage over the long term than you save in total monthly payments. However, you may be one of the many people who now have lower income who will find it worthwhile to refinance with a new 30 year mortgage in order to keep the lowest monthly payment possible.
Many financial gurus will literally have a stroke over this statement, but for some people present payment savings are worth a lot more than future total interest payments. If your high house payment leaves you no money to feed your family then drastic steps are required.
2- Challenge your property taxes.
This is a smart move even if you are perfectly comfortable with your house payment. Local governments are notoriously slow to lower the assessed value on your home in spite of drastically lower home values in many areas. Since your property taxes are bundled in with your mortgage payment, this raises your monthly housing expense unnecessarily. File an appeal on the assessed value on your home and you stand a very good chance of ending up with a lower mortgage payment each month.
3 – Shop your homeowners insurance.
Your yearly homeowners insurance is bundled in with your mortgage payment the same way that your property taxes are. Most people stop paying attention to the yearly cost of homeowners insurance once this happens.
Insurance companies use this opportunity to gradually increase the cost of your insurance policy. In the past when home values were always going up, this was usually to your benefit. However, today you may find that you actually need less coverage than you started out with.
Also review your insurance costs to see if there are new discounts you may be eligible for. This can include discounts for new security systems, or multiple policy discounts. Always be sure to shop other insurance companies each year to make sure your present company is not taking you for granted.
4 – Pay a lump sum on your mortgage.
If you have money saved up that is not getting the high returns that it once did, you may want to look into paying it down on your mortgage instead. With today’s extremely low interest rates this tactic is less beneficial than it once was, but every situation is unique. Most people will find that the money is best left in savings, however due to falling property values in many areas some people may actually need to pay down their mortgage in order to refinance at a lower interest rate.
5 – Sell your home and buy one that is less expensive.
If the above options don’t get your payment down into the affordable range, you may actually want to look into selling your home and buying one that is less expensive. This is not as bad an option as it may sound at first.
Because there are so many foreclosed homes on the market, you may find that you can buy a home just as good as your present home for a fraction of the cost! In fact you may be able to end up with both extramoney in the bank and a much lower house payment if you are savvy and put some effort into getting the right deal on each side of the transaction. This isn’t easy, but can definitely be worth the effort.
Today, lowering your mortgage payment may be an absolute necessity. There are many ways to go about lower your mortgage payment if you apply a little creativity to the problem!