5 ways you reduce your mortgage payments
For most people, their mortgage payment is their largest monthly expense. The good news is there are ways you can decrease your payments. Below are a five ways you can save money on your mortgage.
- If you have extra money, make extra mortgage payments. Anytime you make an extra payment it applies to the loan principal (not interest) so it can drop the remaining balance on your mortgage payment. It also removes the interest each month on the principal for the remainder of the loan. If you can pay bi-weekly on your mortgage you will have made an extra payment to the principal of your mortgage.
- Cut your Private Mortgage Insurance (PMI). If you are paying for private mortgage insurance you can ask you mortgage company to cancel the insurance as soon as the balance for the loan is below 80 percent of the appraisal value of your home (you may have to ask for a new appraisal for your home). Getting rid of your PMI could save you hundreds of dollars a year.
- Reset your mortgage. If you have been making large payments to the principal on your mortgage then your mortgage company may be willing to recalculate your payments by recalculating your monthly principal and interest.
- Loan modification. If you are having financial difficulties or late on your payments you may be able to modify the terms of your loan. By doing this the loans are more affordable and you can stay in your home.
- Refinance your mortgage. One of the best ways to save money on your mortgage is by refinancing your loan. This can lower the interest rate on your loan and reduce your monthly payments.