If money is tight and you’re looking for expenses to cut, you may be searching for ways to reduce your mortgage payment. Fortunately, you have options that can lower your monthly payment to explore.
Find out more information on mortgages.
General Information on Mortgages
Most homeowners in the U.S. have used a mortgage to finance the purchase of their property. Since a home is usually the most expensive asset a family owns, your mortgage may be taking a significant bite out of your paycheck. Unfortunately, the cost of these loans doesn’t go down on their own, but there are ways you can decrease your payment.
Discover three different ways to lower your mortgage.
1. Refinance Your Mortgage to a Lower Payment
One way to reduce your payment is by refinancing your mortgage to take advantage of lower interest rates. However, you’ll need sufficient home equity to qualify for a refinance, which is your home’s market value minus the amount you still owe on your mortgage. Additionally, you’ll also need to pay refinance closing costs.
We recommend you refinance if you can lower your rate by one percentage point. It’s possible to significantly reduce your monthly payment with a 0.5 to 0.75-point decrease depending on when you reach the break-even-point of said costs.
2. Refinance Your Mortgage to a Longer Term
Another reason why you should refinance is so that you can gain more time to repay your mortgage. For instance, if you’ve completed payments on a 20-year loan for a few years, you could refinance the remainder back out to 20 years. If you can successfully refinance, this can result in a lower monthly payment.
Keep in mind that refinancing into another 20-year mortgage means you’ll need to take care of extra interest charges, particularly if you’ve been making monthly payments for a while. It’s crucial to weigh the pros and cons carefully to ensure it’s the best way to decrease your monthly payments.
3. Consider Mortgage Forbearance
Are you experiencing a temporary financial setback? If you’re worried you won’t be able to afford your monthly mortgage payment, you can seek out a forbearance agreement for short-term relief. During forbearance, your lender may suspend your mortgage payments for a few months. At the end of this period, payments will resume as usual, and you may have to repay the missed amount.
Although this sounds like a solid idea if you’re dealing with monetary hardship, it may be as stressful to make up for skipped payments. If you decide to go through with this option, you need to contact your lender before you miss a payment, not after.
Need Relief? Texas Sell Now Can Help
If you’ve wanted to buy a new home, but your current mortgage is holding you back, you can sell your home to Texas Sell Now. We help homeowners in Dallas and Fort Worth, Texas, who have inherited an unwanted property, own a vacant home, are behind in payments, and more. We want to make you a fair, all-cash offer when you’re ready to sell your property. Contact us to learn more.