5 Ways to Lower Your Mortgage Payment
For many American homeowners, the mortgage payment is the hardest monthly expense to pay. If you can’t afford your mortgage payment, you have other options to try before you face foreclosure.
- Say goodbye to private mortgage insurance.
If your downpayment was less than 20 percent, you might be paying hundreds of dollars a month in private mortgage insurance (PMI).
If you have repaid at least 20% of the principal, you can petition your lender to get rid of PMI.
This is also true if your home has gone up in value. You may have to pay for a new appraisal, but you’ll still save money.
- Challenge your tax assessment.
Your property taxes may cost you thousands of dollars a year. If the tax assessment on your property is too high, you can petition your assessor to lower it.
That could significantly reduce your property taxes.
- Refinance your mortgage.
Refinancing means taking on a new loan to replace your current mortgage.
With a lower interest rate, you can reduce your monthly payment and also save on interest in the long run. You can also replace an expensive adjustable rate mortgage (ARM) with a fixed rate.
There are costs associated with refinancing, however. If you’re already struggling to make your mortgage payment, refinancing might be out of reach.
- Ask for a forbearance.
If you have a temporary drop in your income, your lender may be willing to issue a forbearance.
That means reducing or suspending your mortgage payments for a limited period of time. After that, you’ll go back to making regular payments, plus additional payments to bring your loan current.
Forbearance is only a temporary solution. You must be able to show that your situation will improve by the end of the forbearance period.
- Apply for a mortgage modification.
If you can’t make your mortgage payments because of a specific financial hardship, such as a job loss or medical bills, there’s still hope. You may qualify for help from a government program.
Mortgage modification programs are designed to make your payments more affordable by changing the rate, term, or balance of your mortgage.
You must meet certain requirements to qualify for a mortgage modification, including:
- you must owe less than $729,750
- your mortgage must have originated before January 1, 2009
- your payment must be more than 31 percent of your current gross income
Can’t make your mortgage payment?
Remember, there are five main ways to lower your mortgage payment:
- Get rid of PMI
- Change your tax assessment
- Get a forbearance
- Modify your mortgage
If you can’t afford your mortgage, don’t wait until you get a foreclosure notice. Contact your lender right away and ask about your options.