Tips For Lowering A Mortgage Payment

Mortgage debt has been a growing problem since the recession began a few years ago. Since then, many families have been suffering under sinking home values, a growing risk of foreclosure, and unavoidable financial hardships. Luckily, there are ways to obtain a more affordable mortgage payment.

Refinancing

Many lenders are advertising low interest rates and "no fee" refinancing deals. While refinancing can be a great way to lower your mortgage payment, there are some things to consider. First, know that refinancing your mortgage means taking out a new loan. Also, many people don't consider how low they actually need to go in interest rate to make the transaction worthwhile.

For example, if you have already paid 10 or more years towards an existing 30 year mortgage, lowering your interest rate by a point or two may not save you money in the long run when your new loan term restarts to zero. In other words, because you will lose the 10 years of payment progress towards paying off your old loan, lowering your payment to save only a hundred or two dollars a month is typically not worth it in the long run. Further, consider how much in interest you have already paid towards your current loan term.

Mortgage Modification

Modifying your existing mortgage can be a solution when refinancing isn't feasible, or you are experiencing a financial hardship. Mortgage modifications are great because they do not require you to take out a new loan; rather, they modify your existing loan to a payment you can afford. They also are free from out of pocket fees. Many lenders will allow you to modify your mortgage by extending the life of your loan, lowering your monthly payment, temporarily suspending payments, and maybe even reducing the principal amount owed.

In order to secure a loan modification, it is best to contact your lender before missing a payment.

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