Megan Woissol | May 26th, 2022
If you’ve been paying your mortgage for a while, you might be curious about your options for lowering your mortgage payment. Refinancing can open several doors to a lower payment.
Refinancing to Get Rid of Private Mortgage Insurance
If you bought your home using an FHA loan, you’ve probably been paying private mortgage insurance. Refinancing into a different program can be done quickly and gives you the opportunity to remove your PMI, often resulting in a lower monthly mortgage payment.
Refinancing to Extend your Rate Back to 30 Years
This option is best for individuals who own a home that they do not plan to stay in forever. A rate-and-term refinance spreads the remainder of what you owe over 30 years and essentially restarts your payment schedule.
Here’s an example of how this works:
If you originally had a 30 year term but have been paying on your loan for 5 years, you have 25 years left in your loan term. Let’s say that you owe $250,000 today, but refinance your loan and are set back by 5 years – since your remaining balance is stretched across 5 extra years, it lowers your payment.
Refinancing into a Lower Interest Rate
Depending on when you bought, this may not be possible. However, interest rates are always changing and are still at historic lows. The best thing to do in this scenario is to contact a loan officer to discuss your options in depth.
Refinancing to Take Cash Out
If you have debt (credit card, personal loan, car payment), and you’ve had your home for a while, you can refinance and take cash out of your equity to pay off or pay down those other debts and make extra room in your budget that way
Shop your Homeowners Insurance to Find a Lower Rate
Most mortgage payments are comprised of PITI (principal, interest, taxes, and insurance). While your normal mortgage costs don’t increase each year, your property taxes and homeowners insurance typically do. One way to lower your monthly mortgage payment is to shop your home insurance to find something that costs less than your current policy. This will, in turn, lead to a lower overall monthly payment.
Depending on when you purchased your home, some options may be better for you than others.
We recommend talking with us directly to see what options are best.
