5 Ways to Reduce Your Mortgage Payment


Five quick and simple methods that you might be able to save money either on your monthly payment or on interest over the life of your loan. 

#1 Refinance

If you refinance, like a lot of souls did about five years ago, when interest rates sank 5%, then you might be able to discuss with your lender about refinancing. 

If you refinance at today's prevailing interest rates, which are at historic lows, you can save a lot of money on your monthly payment and the long term interest. 

So say, for instance, you took out a loan of $400,000, five years ago 5%. And your monthly payment principal and interest would be about $2147 a month. 

If you refinance at today's current interest rates, the balance of that loan, your monthly payment would come down to $1701 a month, saving you approximately $446 a month, fabulous. 

And then you also will save $122,000  in interest over the life of that loan 

#2 Shorten the life of Mortage.

to shorten the life of your mortgage, if you refinance. And if you can manage just a little bit higher payment in 15 years in a 15-year loan versus a 30-year loan.

you can save tons of money over the long haul on your interest. So let's take that same $400,000 loan 5%, five years ago, refinance into a 50-year loan. 

Now at current interest rates, your payments will only go up to $346 a month, but you will save $286,000 over the life of the loan. Plus you pay off your home in half the time. So 15 years would be nice to have your home paid off for just an extra $346 a month. 


#3 Make Extra Payments here & there

Now, if you can't restrain yourself to make those extra payments or make the higher payment, then go ahead and just make extra payments pay when you can just pay a little bit extra check with your loan to make sure that there are no prepayment sentences. But there usually isn't the check just in case, and go ahead and put $50 here $50 there.

if you get a bonus, put $100 into it, you'll be amazed at how quickly that brings down your principal because all that extra stuff goes into your principal, not your principal and interest. So say, for instance, the Federal Reserve said the Federal Reserve Board did a study and said if you had a $200,000 loan at 6%, and you paid $50 an extra month, that's just $50 extra month, you would end up saving three years.

you pay your house off three years earlier and save over $270,000 in interest. So again, something to look at, a lot of times you know people's lives change, you get married, you get a raise, you pay off your car, take that extra money and put it in to go against the principal of your home. 

#4 Eliminate PMI 

eliminate the nasty word PMI private mortgage insurance. Then when the crisis with credit crisis happened, everything kind of stepped up, you know, all the lenders sucked everything up. And there weren't any really good options for this for the last several years. 

But now things are starting to loosen up again, talk to your lender, see if there's something that you could do. Some people call it a second mortgage, there are other you know names for it. different lenders have different programs. 

But basically what it is is what's called an 80 10 & 10. So 80% is your first loan at regular great interest rates right now 10% would be on a second or whatever that name is that your lender wants to call it at a little bit higher interest rate. But the fact of the matter is, is that interest rate check with your CPA, I'm not one and check with them and see but it is usually tax Dakota tax-deductible for the interest rate on your second, 

whereas PMI is not tax-deductible. So another great way to save a little bit more money and get rid of paying that PMI every month. 

# re-assess your Home to get Tax Discounts

Last but not least, check the value of your home call your broker your any good real estate broker is going to be able to give you a good price opinion on your home right now. And then check and see what you're getting taxed on. 

If that tax assessed value is more than what your market value is, then go ahead and call your tax assessor's at the county and find out how you can challenge it even get on to their website and find out how to challenge that and it's not going to be a lot of money, but it's going to be a little bit of money that puts that dollar into your pocket into somebody instead of somebody else's.



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