The house payment is the largest monthly expense in the budget of most homeowners. Financial advisors recommend a maximum of 33% of the households’ net income be allotted for this monthly outlay; ideally house payments are left around twenty-five percent.
Rocky financial times are experienced by most of us at some time in our lives. In the midst of this challenging economic time even more people are fighting to maintain. Many have already lost their homes due to the financial struggles our country is facing. Those of you that have been hit hard by unplanned medical bills, reduction of income, unemployment or another economic problem, then you may want to try one of these ideas to get your mortgage payment lower.
If your family has had a cut in pay one of best choices for you is a mortgage modification. During this process the borrowers’ representative contacts the mortgage company and discusses new terms for the mortgage to make it better fit the budget of the homeowner. This is a detailed and time consuming process that is best performed by legal professionals. You may be tempted to attempt to get your mortgage payment lower via a mortgage modification by yourself but you will likely wind up frustrated not having gotten anywhere.
Another method to get a lower mortgage interest rate is the refinancing of your existing mortgage. Mortgage interest rates are especially reasonable at the time of this writing and are expected to remain so for several months. If you owed $200,000 a one percent decrease would save you $250 a month. A $150,000 debt, with a one percent reduction in the interest rate, would put your mortgage payment lower by approximately $100. It will cost you some money upfront but if you shop around you should be able to minimize your application fees and closing costs. In addition the savings you get will far out weigh the cost of refinancing in a few years. One should note that this method of getting your mortgage payment lower is more practical for those planning on living in their home for enough time for the monthly savings to pay off.
Another option is downsizing, finding a smaller and less costly house. Often you can locate a less expensive home that matches the size of your existing house if you are willing to live without some features or in a less prestigious neighborhood. You may have to perform some maintenance work or sprucing up but good deals can be found. Consider a suburb if you are living close to the heart of a metropolitan area since land values are usually lower there.
Some folks have decided to buy multi-family housing to live in a portion of it while renting the rest. For example, a duplex would let you to live in one unit and rent the other which would contribute to the monthly loan payment. In time you could sell the property and move back into a single family dwelling. This option can be viewed more an investment and, depending on the market, the rent you charge could lower your house payment.
The next method could seem contradictory, still it is worth listing: Pay extra toward your loan every opportunity you get. As all extra payments go straight toward your principal it decreases the overall amount you owe. Since your mortgage insurance is based on the principal you still owe, as you pay down your mortgage your insurance cost goes down. Another advantage to paying more than the minimum and always on time is that loan companies are more willing to work with you if you experience a financial problem and need to skip a payment or want to apply for a loan modification.
Most mortgages are thirty-year loans. Be certain your due diligence is comprehensive and you are getting the best deal available regardless of which option you choose to get your mortgage payment lower. Choose wisely and you could be saving tens of thousands of dollars throughout the life of your mortgage.
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