Your home is probably the largest investment you have ever made, and with our current economy you may be thinking about ways to stretch your budget dollars with a mortgage reduction. There are many different ways to reduce your monthly mortgage payments; and not all of them require that you have excellent credit.
One way to reduce your mortgage payment is to move to a less expensive home. Not only are you likely to reduce your mortgage payment, but you may see a reduction in utility bills and possibly a reduction or elimination of expensive home owner's association dues.
Don't want to move? Assuming what you are looking for are ways to reduce the mortgage payment on your current home, here are several possibilities to consider:
Refinance
With interest rates so low, this can be a compelling choice, especially if you are currently paying 2% or more in interest than the current going rate and if you are planning to stay in your home for at least the next five years. You will pay closing costs to refinance, but if you are going to own the home for a long time you will save money in the end - while reducing your monthly payments.
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Think about buying down your loan interest rate by paying points up front to reduce your monthly payments.
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Talk to your lender about refinancing into a longer term loan. Many lenders offer 40 and 50 year mortgages, which will cost more over the long term but will lower your monthly payments.
Private Mortgage Insurance
Chances are your current mortgage payment includes PMI. If your current mortgage balance is less than 80% of the value of the home (in other words, when you have 20% equity) you can ask your lender to cancel your private mortgage insurance.
Homeowners Insurance
If you escrow your hazard or homeowners insurance premium as part of your monthly mortgage payment, shop around for less expensive homeowners insurance. Be sure you have your current policy's terms available when shopping so that you can make an informed decision about insurance coverage.
Property Tax Relief
Some municipalities offer property tax relief to senior citizens or those who qualify for Social Security disability. Often you have to submit an application by a particular annual deadline, but this can result in a significant percentage of your property tax bill being lowered while you own the home.
Reverse Mortgage
For qualified senior citizens with enough equity in their homes, a reverse mortgage will not only eliminate monthly mortgage payments but a large portion of the home's equity becomes available to either be paid to the homeowner in monthly payments or as a lump sum.
Get Legal Help
Contact an experienced attorney if you have questions about what you can do to lower your monthly mortgage payments and avoid foreclosure or if you think you might be interested in a reverse mortgage. Be careful to avoid getting involved in any scams by checking with your attorney before committing to a mortgage refinance or signing any documents that will affect your financial future.
