A mortgage can seem like a blessing. It allows you to purchase your dream home and usually the monthly payments are manageable. But what happens if your financial picture changes for the worse? Most home mortgages have a 15 to 30 year term and in this lengthy span of time anything from a serious illness to a lost job can make paying for it impossible. Rather than risking foreclosure in the future, use these five ways to lower your mortgage bill.
Refinance into a Lower Rate or HARP
If you obtained your original mortgage at least four years ago, your interest rate is probably higher than what lenders are currently offering. Refinancing to a lower rate can help you save hundreds of dollars a month, especially if you only refinance the principal owed on your mortgage without cashing additional equity out of your home. If you are currently upside down, which means you owe more on your home than it’s worth, a HARP loan can help you refinance into a better mortgage.
Refinance into a Longer Term
If you obtained a 15-year mortgage, the payments might be too high. Stretching those payments out into a 30-year term will greatly reduce your monthly obligation. If your financial picture improves, you can always pay more money towards the principal of the loan, while maintaining responsibility for the 30-year term payment.
Argue your Real Estate Taxes
Real estate taxes go up and down year after year, but you still have a say in your tax bill’s “assessed value” of your home. If you believe the county is assessing your taxes based on the wrong home value, or if you believe you’re paying more than similar homes in your neighborhood, you can argue for what you feel is a fair tax. The process differs for every county, but it usually begins with you pleading your case in writing. You will then attend a hearing where you will provide evidence for your claim that the county should lower your taxes.
Shop Around for Homeowner’s Insurance
Your monthly mortgage payment consists of the principal, interest, real estate taxes, and homeowner’s insurance. Homeowners’ insurance is usually the only monthly fee that can be adjusted year after year. If you stick with one insurance company, chances are your insurance premiums will continue to rise. However, if you shop around by changing agents or by showing your current agent quotes from other companies, you can often lower your monthly premium.
Get into the habit of going through your monthly payments once a year. With a little research and creativity, you’ll be able to cut costs and ensure the affordability of your home for years to come.
