While you can always keep your expenses to a minimal, your mortgage payment will surely take the biggest chunk out of monthly paychecks.
Good thing that there are a few strategies that can help lower your mortgage payments:
1. Get a cheaper house.
Under buying is much better as you can always move up later on, instead of over buying and finding it hard to make your monthly payments. Make sure that you are realistic when buying a house, and factor in all important things such as your interest and principle, homeowner’s insurance and taxes, or even an HOA fee and mortgage insurance.
2. Request the Seller to Pay the PMI
Although you might be short of cash for making a bigger down payment, you will be able to lessen your monthly bill with an upfront private mortgage insurance. You can request the seller to pay this as an alternative to price reduction.
3. Increase the down payment.
Down payment always has a great impact on your payment. If you already have enough cash, and you think you can handle from there, you can make a 20% down payment, and skip paying the PMI.
4. Pay Points
You can pay points at the closing to buy down the interest rate. When you pay one or several points, each of this is equivalent to 1% of the loan balance, thus letting you reduce your loan’s mortgage rate.
5. Recast the Loan
While majority of the lenders are not actively marketing this service, you could in fact request for a loan re-amortization or recast. This is done through making lump sum payment for the principal that can reduce the principal balance. The lender will then recalculate the payment based on this lower balance.
6. Select an ARM
Many homeowners don’t really keep their first purchase of real estate for over several years so a 30-year fixed rate might not make sense if you will not use it. What you can do instead is choose from hybrid ARM produces which provide fixed introductory rates.
It will cost you a bit more to refinance your loan instead of recasting it but you can have much lower monthly payments depending on the loan term and interest rate. Refinancing can lower the interest rate and it can also re-amortize your remaining balance over new loan term.
8. Ditch the Mortgage Insurance Coverage
When you already have your own house, and you want to decrease your monthly payments, check how close you are to getting rid of your PMI. You can also have the PMI eliminated by making extra payments to lower the loan balance below 80% of the original value of your home.
9. Request for a New Tax Assessment
Property taxes are part of loan payments. If you feel like the assessment is relatively high, you might appeal it to lower your tax burden. Just be careful since a new assessment might discover that your house is worth more than in the past, thus making your taxes go up.
Posted by Randy Blakeslee- GetnSocial