How to Lower Your Mortgage Payment

Knowing how to lower your mortgage payment in Nevada can help free up money to address other financial responsibilities, including repaying other higher-interest loans and saving for emergencies. Refinancing to lower your interest rate, requesting your lender to recast your mortgage, and removing your mortgage insurance are some effective strategies for lowering your mortgage payment. Other strategies include loan modification, switching to a more affordable homeowner’s insurance, and disputing your property taxes.

The right strategy for lowering your mortgage payment will depend on your unique situation. A lawyer knowledgeable in mortgage planning can assess your situation and advise you on the best way to reduce your payment and save some funds.

How Can Loan Modification Help?

Loan modification can be a wise decision if you can’t make mortgage payments. A modification can prevent you from missing payment deadlines or defaulting altogether by adjusting your monthly payments coupled with other loan terms. Other ways a loan modification can help you include:

Lower Monthly Payments

A reduced monthly payment is one of the biggest advantages of having your mortgage loan modified. Making a smaller payment every month can be a huge relief if you have experienced a drop in your monthly earnings or added a new expense.

Obtaining a Forbearance or Accrued Interest Reduction

Your lender might sometimes accept to forbear (pause or reduce your payment for a limited time) or lower a portion of the interest you have already accrued on the principal. This option can help lower how much you owe your lender.

Lower Interest Rates

Your lender, in some instances, may approve a loan modification agreement that reduces your interest rate.

Peace of Mind

Besides the tangible financial rewards, a modified mortgage loan agreement gives you peace of mind by knowing you are in control of your finances.

A loan modification lawyer can evaluate your current mortgage loan to determine your eligibility for modification. The lawyer can also negotiate aggressively with your lender to increase your chances of getting a loan modification agreement that suits your situation.

How to Lower Monthly Mortgage Payments in Nevada

Refinance to Lower Your Interest Rate

One of the most common and reliable ways to bring your mortgage payment down is to refinance it to obtain a better interest rate. Refinancing a mortgage involves switching from your current mortgage to a loan with a lower interest rate.

Several refinancing options are available. Some have a rigorous vetting process akin to that of purchasing a home. The lender assesses your earnings and loan. A home appraisal is also compulsory to help the lender calculate your home’s value. Other refinancing options do not require income and home appraisal documents. The following are some refinancing options to consider:

• Conventional Rate-and-Term Refinance: This option entails taking a new loan at a lower interest rate to clear your current balance. You should, however, note that closing costs apply to a refinanced loan. Fortunately, you can lower those costs by improving your credit score, comparing mortgage refinance rates from different lenders, and negotiating closing costs. You can also add them to your new loan amount.
• FHA Streamline Refinance: This option allows you to bypass income verification and home appraisal if you have a Federal Housing Administration (FHA)-backed mortgage. You will, however, need enough money to cover the closing costs, as the option of incorporating them into the new loan amount is not available. You might qualify for an FHA loan when refinancing during Chapter 13 bankruptcy if you have been meeting your repayment plan requirements for at least 12 months.
• USDA Streamline Assist Refinance: This program allows you to skip income documentation, credit assessment, or home appraisal when refinancing your mortgage. The program is, however, only available to borrowers with loans backed by the U.S. Department of Agriculture (USDA).
• The VA Refinance Program: This program allows you to lower your interest rate if you have a mortgage guaranteed by the U.S. Department of Veteran Affairs (VA) and have been meeting payment requirements. It also allows you to roll the closing costs into the new loan. What’s more, it does not require income verification or home appraisal. The program is, however, only available to qualified military borrowers.

Recast Your Mortgage

Recasting your mortgage is another effective way to lower your monthly mortgage payment. This option involves paying off a significant portion of your principal’s balance. Your lender then re-determines your monthly payments using the new balance and the same loan conditions. With a reduced principal’s balance, your monthly payment will lower. The total interest paid over the life of the loan will also be lower.

Removing Your Private Mortgage Insurance (PMI)

You pay for PMI if your deposit on a home purchase is below 20%. This insurance can cost you anywhere from 0.5% to 1.86% of your loan amount per month. You can, however, ask your lender to remove it after reaching 20% in home equity.

This rule does not apply if you have an FHA loan. You must pay the FHA mortgage insurance premium (MIP) over the course of the loan, provided your down payment is under 10%. Fortunately, you can apply for FHA MIP removal after paying your current loan for 11 years.

Switching to an Affordable Homeowner’s Insurance

Replacing your current homeowner’s insurance with a more affordable one can help bring down your monthly payments. You must, however, research and compare quotes from different insurance companies to find one that is the right fit for you. Besides finding a new policy, you can lower your premium by increasing your deductible, checking for discounts regularly, and removing high-risk stuff like playground equipment or trampolines from your home.

Disputing Your Property Taxes

Property taxes may account for a large portion of your monthly mortgage payment if an escrow account is part of your home loan. You can get your property tax bill reduced if you think the tax assessment of your property was inaccurate. You will, however, need to file an appeal with the relevant tax board at the local, county, or state level.

Benefits of Lowering Your Monthly Mortgage Payments

There are many benefits for homeowners who lower their monthly mortgage payment.

Free Up Some Additional Funds for Other Financial Obligations

Lowering monthly payments offers you some extra cash to address other financial obligations. These obligations include things like starting a college fund, clearing a credit card debt, and making home improvements.

Grow Your Savings

You can put the money saved from reduced monthly payments in a savings account. Your savings will come in handy in the event of an emergency. They will also give you a feeling of security by knowing that you can still meet your monthly payment obligations in case of delays in your regular source of income.

Enjoy Benefits Associated With a Refinance

You might have your PMI removed from your monthly payment. Of course, that will depend on your loan product and the amount you have repaid so far.

Get an Adjusted or Stabilized Rate

Lowering your monthly mortgage payment enables you to replace your current loan with a long-term one. You can, for instance, replace an adjustable-rate loan with a fixed-term one.

Avoid Financial Hardship

Unmanageable mortgage payments can wreak havoc on a family’s financial stability. Modifying a mortgage loan can help struggling families regain control of their finances and plan for a better future.