Learn How to Lower Your Mortgage Payment with Cliffco
Paying off a mortgage is a long-term commitment and meeting your obligations will likely be difficult at times. Whether you have a 30-year mortgage or a shorter loan with a larger payment, there are going to be some months when your income is tight. Everyone’s situation changes over the life of a mortgage and the one thing that will stay consistent is a desire to lower mortgage payments.
Cliffco Can Help You Achieve the Dream of Home Ownership
Cliffco Mortgage Bankers knows that the road to paying off a mortgage is not without some bumps. We’re also committed to helping our customers achieve the dream of home ownership. So we’d like to tell you some ways to lower your mortgage payment to help get you to that finish line.
One of the most common steps people take to lower their monthly mortgage payment is to simply refinance your mortgage loan. Refinancing will lower your obligation, but there are some questions you need to ask before you go through with it. According to The Balance, there are two things you should look at before refinancing: the age of the loan and the potential new interest rate of the refinanced mortgage.
Mortgages are structured in a way that borrowers mostly pay off interest at the beginning of the loan. So interest rates are more important at the start of the term rather that the end of the term when you’re mostly paying off principal. When you refinance, the term of your mortgage reverts back to day one so it makes little sense to go back to the beginning late in your current mortgage term.
Change the Length of Your Loan
This usually is something to consider if you have a 15-year or 20-year loan. Shorter loans tend to have larger monthly payments, but it’s important to remember that longer loans charge higher interest rates. So while your monthly payment will be lowered, you’ll be paying more money over the length of the loan. Lengthening the loan is something to consider if it will keep you from falling behind on your monthly mortgage payment and may possibly be in danger of foreclosure.
Remove Your Private Mortgage Insurance
According to the website Wisebread, private mortgage insurance, also called PMI, usually costs home buyers from 0.5 percent to 1 percent of their mortgage amount, so for a $200,000 mortgage, PMI costs up to $2,000 or about $166 a month. Home buyers only have to pay for PMI if they put down less than 20 percent of a home’s purchase price as a down payment. But it is possible to drop PMI. If you have built up at least 20 percent equity in your home, you can ask your lender to drop it. The lender will usually send out an appraiser to determine if you’ve reached the 20 percent threshold, but if you qualify you’ll have less to pay.
Challenge Your Property Tax Assessment
Part of your mortgage payment goes to pay off your property taxes. The lender sets funds aside to pay the tax bill in order to protect their interest in your home. The money sits in escrow until the bill comes due. But your county’s tax assessment of how much your home is worth may be too high. You can challenge the assessment and if your challenge is approved, your property taxes will drop as will your monthly mortgage payment.
You should always keep track of what could affect your mortgage because doing so can save you money down the line. You should also look for the best deal when applying for your mortgage. Cliffco can help by explaining your options. If you’re interested in buying a home let us help. Contact Cliffco today.