3 Ways Your Mortgage Payment Can Decrease

One of the great things about buying versus renting is the ability to fix your mortgage payment and to enjoy the same affordable payment potentially for decades. Over time, the payment on a fixed-rate mortgage will hold steady while your income and other expenses may increase. In this way, your relative housing payment may decrease even though the actual payment stays the same. There are also methods to decrease the actual amount that you pay for principal, interest, taxes and insurance.

By Choosing an Adjustable-Rate Mortgage
While some mortgages come with a fixed rate for the entire life of the loan, others are adjustable-rate mortgages. The specifics of these mortgages may vary slightly by program. However, they generally offer a fixed starting rate for up to 10 years. At the end of the fixed-rate period, the interest rate will adjust based on market conditions. The adjustment may be based on a spread over a pre-determined index rate. Generally, floors and ceilings are built in, and these limit how high or low the mortgage rate can go when it adjusts.

By Refinancing Your Mortgage
If have opted to lock in today’s low rates with a fixed-rate mortgage for the full life of the loan, it may still be possible to reduce your payment. Even if mortgage rates rise over time, you could set up a lower monthly payment by adjusting the starting principal balance through a refi. In some cases, you can lower your rate, take out equity in the form of cash and even adjust the term to pay off the loan faster all through refinancing.

By Locking in Savings on Taxes and Insurance
Generally, property taxes and home insurance premiums rise over times, but this is not always the case. If these expenses drop, the adjustment to your mortgage payment will be made automatically. You could also pursue a lower taxable value by requesting a reassessment of your home. Likewise, shopping around for property insurance from time to time may help you to identify another opportunity to save money.

Do you have questions about lowering your mortgage payment? Our associates at MortgageDepot are available to answer your questions and to help you identify money-saving opportunities.

Contact one of our loan consultants to learn more.