The house payment is the biggest monthly expense in the budget of most people. Financial advisors suggest a maximum of 33% of the households’ take home pay be allotted for this monthly outlay; ideally house payments are kept around twenty-five percent.
Tough financial periods are experienced by most of us at some point in our lives. In the midst of this tough economic time more and more people are struggling to maintain. Too many have already lost their homes due to the financial struggles our country is facing. Perhaps you have been affected by unexpected medical expenses, reduced income, unemployment or another economic distress, then you may want to look into one of these methods to get your lower mortgage payment.
If your family has experienced a decrease of income one of most viable options for you is a mortgage modification. During this process the homeowners’ representative contacts the mortgage company and discusses new terms for the mortgage to make it more affordable for the borrower. This is a detailed and time consuming process that is best performed by experienced professionals. You may be tempted to attempt to get your mortgage payment lower through a mortgage modification by yourself but you will likely end up frustrated not having made any progress.
Another method to get a lower house payment is the refinancing of your current mortgage. Mortgage interest rates are especially reasonable at the time of this writing and are expected to remain so for a good while. If you refinanced $200,000 a 1% drop would reduce your mortgage $250 a month. A 150,000 refinanced, with a 1% reduction in the interest rate, would put your mortgage payment lower by about 100. It will cost you some money upfront but by shopping around you should be able to minimize your application fees and closing costs. Also the savings you get will far out weigh the cost of refinancing in a few years. One should note that this technique of making 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.
Another option is downsizing, getting a smaller and less costly home. Often you can locate a less expensive home that matches the size of your current home if you are willing to live without some amenities or in a less prestigious area. It is possible you will have to perform some maintenance work or sprucing up but the bargains are out there. Consider a suburb if you are living close to the middle of a metropolitan area since prices are usually lower there.
Some folks have decided to buy multi-family housing and live in a portion of it while leasing the rest. A duplex for example would allow you to stay in one side and rent the other which would help with the monthly loan payment. Once you have built some equity you could sell the duplex and move back into a single family dwelling. This option may be thought more an investment and, depending on the market, the rent you charge could reduce your house payment.
The next method could seem contradictory, still it is worth mentioning: Pay an additional amount toward your loan each opportunity you get. Since any extra payments go directly toward the principal it decreases the overall amount you owe. Since your mortgage insurance is determined by the principal you still owe, as you pay on your mortgage your insurance premium goes down. Another advantage to paying extra and consistently on time is that loan companies are more willing to work with you if you experience a financial difficulty and need to skip a payment or want to request a loan modification.
The majority of mortgages are thirty-year loans. Be sure your due diligence is comprehensive and you are receiving the best deal on the market regardless of which option you pick to get your mortgage payment lower. Choose wisely and you could realize a savings of tens of thousands of dollars over the life of your mortgage.
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