No one likes a big monthly mortgage bill, but it’s a fact of life for most homeowners. However, you could make that big bill a little smaller, and, with a bit of financial savvy, trim your mortgage down to a lower payment amount. Here are four tips on how to lower your monthly mortgage payment—and maybe even pay your home off more quickly in the process.
1. Refinance your mortgage
For many homeowners, interest rates have dropped since they first bought—which means refinancing your home with a new mortgage could seriously drop your monthly costs. If you’re financial bind, refinancing over a longer loan term will also reduce your monthly costs, though you’ll be stuck paying more in interest over time.
On the downside, if you refinance, you’ll have to pay closing costs on the new loan—but even with this fairly sizable up-front cost, refinancing to a lower interest rate may well be worth it. Talk with your lender to see what kind of deal they’re willing to offer and what your monthly payments would be.
2. Make extra mortgage payments
We know that making more payments doesn’t sound like a way to save money, but hear us out. Making extra payments towards the principal of your loan means you’ll pay the loan off faster, which means you’ll be paying less in interest. Though you’re spending more now, the savings over time will definitely add up.
If you have some extra cash, try making an extra payment every year towards the principal. If that’s not feasible, consider talking to your lender about making payments every two weeks—it won’t feel like you’re spending more, but over the course of a year this will add up to an extra payment all the same.
3. Ditch your private mortgage insurance
If you didn’t make a down payment of 20% when you first bought your home, your lender probably required you to get private mortgage insurance (PMI). But once you’ve managed to get the necessary equity in your house, you’re no longer required to pay for it—talk to your lender and enjoy the savings!
4. Lower your tax assessment
Though we like to see our home’s value going up, a higher appraisal means higher property taxes. Not all areas conduct a new appraisal annually. If your home hasn’t been appraised by the local tax assessor/appraiser in the past year, contact your tax assessor about having the value of your home updated. If your home has been appraised and you feel the value came in too high, you can contact your local tax assessor about updating the value. Though there’s no guarantee the value will be changed, it’s worth trying.
Not sure what your home is worth from a tax standpoint? Tax assessors will typically appraise property based on sale prices of similar homes in the area. If you find several homes that are similar to yours but have a lower appraisal value, you may be in luck.
If none of this has helped with your mortgage payments, don’t despair, because cutting your monthly expenses is still possible—if you take a good look at your expenses, there are probably some places to trim that could save you as much as any of these mortgage tips.
First on the cutting block, we recommend checking non-essentials, like cable television or cellular phone service, to see where your bills might be trimmed. Do you need all of those television channels or that extra cable receiver? These costs may seem small when you added them to your cable package, but they add up over time—and removing them will add up to savings. If you want to cut costs, be sure to check all of your bills for places to trim. Even the smallest savings will add up over the year!