5 Ways to Reduce Your Monthly Mortgage Payment
Owning a brand new home is always a dream come true. Unfortunately, there are plenty of constraints that come with it. The most predominant is the mortgage. Paying a huge mortgage every month can get exhausting. People end up paying a heavy mortgage against their paycheck, which will leave nothing for the rest of the expenses. What is a way to relax? There are several different ways proven by the mortgage lenders in Massachusetts to reduce your mortgage payment to less than 30%.
5 ways to reduce your mortgage payment monthly are as follows.
1. Avoid paying PMI
Private mortgage insurance, or PMI, is insurance that banks need borrowers to have when they get a mortgage. To avoid this, the buyers have to arrange 20% of down payment which is not possible in some situations. But you can cancel PMI premiums eventually by paying your mortgage amount faster. If you can prove that you owe 80% or less of your home’s value and start to build equity in your home, then it is a good idea to evaluate the condition.
2. Consider Refinancing your Mortgage
Refinancing will help you in lowering your monthly mortgage payment to a lower rate or extending your loan period up to 30 years, making it convenient to pay your mortgage on time every month. However, you will incur a closing amount. You restart your mortgage for an extended period with the same terms and conditions, but the downfall of this is you end up paying more interest. It’s always better to consult the lender before getting into it.
3. Re-Amortize your Mortgage terms
Another neat way to reduce your monthly payment is Re-amortizing. This process involves spreading your mortgage term back to 30 to 40 years. By doing this, you can reduce your mortgage payment drastically. However, you will end up paying more interest over the life of the loan. But, on the bright side, your monthly payment will be reduced. In the future, if you can afford a larger payment you can pay a little extra each month and pay off your mortgage early.
4. Reopen Your Home’s Assessed Value with the County
Another exceptional way to reduce your monthly payment is by refuting the property tax on your house. The bank usually deducts your property tax in case you fail to pay your yearly property tax. This tax assessment is very high and it totally depends on the value of your property or the area the house is located at. Sometime there will be a dip or spike in the property value due to market fluctuation. It is suggested to appeal to the county to reassess your property tax which will help you reduce your monthly mortgage payment.
5. Pick the interest-only mortgage
Some banks don’t expect you to start repaying your balance right away. Banks offer an interest-only loan. Interest-only (I/O) mortgages occur in two stages: the first phase, where you only pay the interest on your mortgage and the second phase, where you pay off the actual principal balance plus interest. If you have a 30-year mortgage you can plan your mortgage repayment accordingly and at your convenience. Until your interest- free phase is over your monthly payment will be less and then you can work out a plan and increase your payments.
There are multiple ways to reduce your monthly mortgage payment. To find out the best option for you, decide whether you need a temporary or long-term solution. You can do this by contacting the best available mortgage lenders in Massachusetts.