Decrease You Monthly Mortgage Payment

If you don’t refinance, you may be paying too much every month for your loan and that is not the smartest financial decision. A drop of just one half to three quarters of a percentage point in interest can lower your monthly payment. The following are a few different ways you can lower your monthly mortgage payment:

First, you can refinance to a lower interest rate. A lower rate means a lower monthly payment.

Second, you can shorten or lengthen the term of your mortgage. For example, if you have a 15-year mortgage, you can change the term to 30 years. Now that the balance of your mortgage is spread out over a longer period of time, the payment will be lower. If you have a 30-year mortgage and one of your financial goals is long-term savings, you may want to consider changing your term to 20 or even 15 years. Your monthly payment will be higher; however, the amount paid in interest will be much less, saving you thousands of dollars over the life of the loan.

The third way to lower your payment is to refinance to an interest-only loan. With an interest-only loan, the minimum amount you are required to pay is the amount of interest for a certain period of time, though you can pay as much principal as you like. You will get the flexibility to pay less if you need or want to divert your money elsewhere, such as contributing to your 401k or saving for your child’s college tuition.