There are three things you can do to lower your monthly mortgage payment. These things include: lengthening your mortgage term, lowering your interest rate, or refinancing to an interest only or adjustable rate mortgage.
Interest only mortgages loans are not recommended for anyone other than the most financially savvy homeowners. It is very easy to get overextended with the payments on an interest only loan and you could lose your home as a result. Adjustable rate mortgages typically have lower interest rates than traditional fixed rate mortgages; however, current market conditions have created an “inversion” where adjustable interest rates are rising much faster than long term fixed interest rates. As a result, many homeowners with adjustable rate mortgages are refinancing to traditional fixed rate loans.
If lowering your monthly mortgage payment is important to you, changing the mortgage term is a safer way to do this. If you currently have a 15 year mortgage, refinancing to a 30 year mortgage is a quick fix. If you already have a 30 year loan you may be able to negotiate with your lender to extend the remaining term. If this is not an option for you, 40 year mortgages are becoming increasingly popular; however, you would need to refinance with a new lender.
Another option if you do not planning on moving is pre-paying interest to lower your interest rate. This is done by paying points to the lender in exchange for lowering your interest rate. Points are paid at the time of closing and one point is typically 1% of your new mortgage loan amount.
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