Hopefully, the monthly mortgage amount and interest rate you lock in when you take out your home loan will work for you over the entire term that you are paying it off.
But sometimes, there might be an unforeseen change in your circumstances that makes it difficult to keep up with your mortgage payments.
Refinancing your home loan to reduce the monthly mortgage amount or interest rate is one possible approach to making your mortgage affordable again.
But you might be wondering if there are ways you can reduce the amount you need to pay each month without refinancing.
Is It Possible To Reduce Your Monthly Mortgage Amount Without a Refinance?
The answer to that question is “yes.” Let’s go over some ideas now.
- Recast the home loan. One of the first things you can try is recasting your mortgage, also called “re-amortizing” your mortgage. This is a process through which you request that your lender extend your loan term without jumping through the hoops and expenses of a full refinance. You will pay a fee for this change, but it should not be as expensive as a refinance. It is also a relatively quick and easy process. The downside of this method is that over the lifetime of your mortgage, you will ultimately end up paying more because of the interest. But at least your monthly payment amount will be lower, and you will be able to keep up and stay in your home.
- Check if you have been overpaying on escrow. Do you think you have been paying more into escrow than the actual cost of your taxes and insurance for your home? If so, it is possible that you can have the escrow payment amount reduced going forward. The result will be more affordable homeownership.
- Paying for mortgage insurance? Find out if you can stop. If you are paying for mortgage insurance, removing that cost each month can make a significant difference in your financial wellbeing. If you have a conventional loan, you may be paying for PMI. If you have an FHA mortgage, you may be paying for MIP. In some situations, MIP on FHA mortgages can expire, and you can stop paying it. In other cases, however, refinancing is the only option for removing it. Are you paying for PMI on a conventional loan? Is your equity now at or above 20%? Request to get rid of the PMI. Your lender may be willing to drop it. If your LTV is 78% or higher, the lender must drop the PMI at your request.
- Find more affordable insurance. If you must keep paying for homeowner’s insurance, shop around. There could be a less expensive policy out there than what you have right now.
- Check if you are paying higher property taxes than necessary. Something else to look into is whether you are overpaying on your property taxes. This could happen if the tax assessment on your home is too high. The situation is a lot more common than you might think. You can try making an appeal if you believe this is the case. If the county agrees that your home is over-assessed, your property taxes could decrease.
- Apply for the Home Affordable Modification Program (HAMP). Depending on the status of your mortgage and some other factors, you might be eligible for a hardship-based program called the Home Affordable Modification Program (HAMP).
We Can Help You Assess Your Options
If you are in a situation where a refinance might make sense, we can help you figure out whether it would be beneficial to move forward or if there are other options that might help you to reduce what you need to pay each month on your mortgage and associated homeownership costs.
To schedule a consultation to discuss your needs, please give us a call now at 954-840-8811. Together, we will find a suitable way forward.