A Few Methods You Could Make Your Mortgage Payment Lower
The house payment is the biggest ongoing expense in the budget of most homeowners. Experts recommend a maximum of 33% of the households’ net income be budgeted for this monthly outlay; ideally house payments are left around twenty-five percent.
Some 300 folks, with each individual waiting simply to get inside a job fair Wednesday at the Baltimore Convention Center.
Tough financial times happen to most of us at some time in our lives. During this tough economic time even more people are struggling to maintain. Too many already have lost their homes due to the economic struggles our country is facing. Those of you that have been affected by unplanned medical expenses, reduced income, unemployment or another economic distress, then you might want to try one of these ideas to make your mortgage payment lower.
If your family has experienced a cut in pay one of most viable choices for you is a mortgage modification. During this process the homeowners’ representative contacts the lender and discusses new terms for the mortgage to make it better fit the budget of the borrower. This is a detailed and time consuming process that is best handled by legal professionals. You might be tempted to work at getting your mortgage payment lower through a mortgage modification on your own but you will likely end up frustrated without having accomplished anything.
Another way to get a lower house payment is the refinancing of your current mortgage. Interest rates are very reasonable right now and are anticipated to remain so for a good while. If you refinanced $200,000 a one percent drop would save you $250 a month. A $150,000 debt, with a one percent decrease in the interest rate, would put your mortgage payment lower by approximately $100. There are some upfront costs but by shopping around you should be able to get the best deal on your application fees and closing costs. Also the savings you get will pay for the cost of refinancing in a few years. However, this technique of getting your mortgage payment lower is more practical for those planning on living in their home for enough time for the monthly savings to pay off.
There is always the option of downsizing, finding a smaller and less expensive house. Often you can find a less expensive home that is the size of your current house if you are amenable to living without some amenities or in a less prestigious neighborhood. It is possible you will have to perform some maintenance work or sprucing up but good deals are out there. Think about moving to a suburb if you are living close to the heart of a metropolitan area since land values are often lower there.
Some folks have decided to purchase multi-family housing to live in a portion of it while leasing the rest. For example, a duplex would let you to stay in one side and rent the other which could help with the monthly mortgage payment. Once you have built some equity you could sell the duplex and move into a single family dwelling. This option can be thought more an investment and, depending on the market, the rent you charge may reduce your house payment.
The next method may seem contradictory, but is worth mentioning: Pay extra on your mortgage every chance you get. As all extra payments go straight toward your principal it reduces the total amount you owe. Since your mortgage insurance is based on the principal you still owe, as you pay down your mortgage your insurance cost goes down. Another benefit to paying more than the minimum and always on time is that mortgage companies are more willing to work with you if you have a financial problem and need to skip a payment or want to apply for a mortgage modification.
The majority of mortgages are 30 year loans. Make sure your due diligence is comprehensive and you are getting the best deal on the market regardless of which option you choose to make your mortgage payment lower. Choose smartly and you may realize a savings of tens of thousands of dollars over the life of your mortgage.
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Posted by Carlos Sagastume on March 26, 2009. Filed under HUD Homes.
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