How to Reduce Your Monthly Mortgage Loan Payments

Wouldn’t you love to know how to reduce your monthly mortgage payments? This article offers some tips.

1.  Pay Points

Lenders offer loans in different combinations. Most lenders often loans with different combinations of points and interest rates. If homebuyers are willing to pay points (expressed as a % of the mortgage amount) upfront, the interest rate is typically lowered by a few basis points. There are several calculators on the web that will allow homebuyers to determine which combination of points and interest rate will best suit them. The fixed rate mortgage calculator (link) at anawise.com will allow you to model loans with different interest rate & point permutations.  It’s wiser to pay points, if you anticipate holding on to that loan for a long time. If that’s the case, the money paid upfront for the points is offset by the savings obtained by paying a lower interest rate.

One of the most convenient ways to reduce monthly mortgage payments is to refinance your home loan. Refinancing, as the name suggests, is the process of paying off an existing loan balance by another loan with a lower interest rate. For e.g. if you have a loan balance of $ 100,000 on a loan with an interest rate of 7.5 %, and if the interest rates drop to 7%, you can refinance your existing loan, or swap out your loan balance with a loan at 7%. You can also tap into the equity in your home with a refinance. When researching a refinancing option, it’s prudent to first approach your lender as he or she has all of the paperwork on your mortgage and can lower the transaction cost of processing a refinance. Folks facing difficulty in paying their mortgages can also refinance into a loan with a longer term, thereby reducing the monthly mortgage payments.

Review your mortgage payments carefully. Even small errors in your math can snowball into significant amounts. The Anawise Report offers you the ability to model unlimited loan scenarios absolutely free.