Every homeowner who is making monthly mortgage payments would like to find a way to reduce this monthly expense. This article will offer tips on how to lower your mortgage payment. This might be easier than you ever could have imagined. Take time to review each of these tips and act on the tips that you believe could help lower your mortgage payment.
Ask For A Reduction In Your PMI
Obtaining a reduction in your private mortgage insurance may be easier than you might believe. The PMI premium included in your mortgage payment may be as high as 1.3 percent of the amount you financed. This could be $195 a month on a $200,000 loan. If your home has increased in value since you purchased it, then your equity may now be more than 20 percent of the appraised value. Typically, PMI is not required for mortgages on these properties.
In January 2015, FHA announced that lower PMI rates would be required on new mortgages. This would indicate that lenders might agree to lowering your PMI. If your lender does not agree to lowering your rate, then consider refinancing your mortgage with another lender, and take advantage of other benefits to refinancing.
Reducing your PMI rate is just one of the advantages of refinancing. Mortgage rates have remained low, and the difference in the rate on your existing mortgage and a new mortgage could be significant. Many online mortgage calculators will help you determine your monthly savings with a reduced interest rate. As an example, a $200,000 mortgage with a 5 percent interest rate would have a principal and interest payment of $1030, but a 4 percent interest rate would require a monthly payment of $916. Refinancing would likely eliminate the PMI.
You can also buy a lower interest rate by buying up to three points which means that each point would reduce your interest rate by up to 0.25 percent. If you plan to keep the new mortgage for five years or more, it might be worthwhile to consider buying the interest rate down.
If you do not qualify for conventional refinancing, then you can look at a refinancing option through HARP which is The Home Affordable Refinance Program created by the U.S. Government. This program has helped thousands of people to refinance and to obtain a lower monthly payment.
If your home has the capability of renting a room you might find this to be good way to increase your cash flow. This works best when you have a separate entrance for the tenant to use. However, many people work long hours and just need a place to sleep, or they travel a lot and just need a nice place for a night or two in your town.