Editors note: We have some great news! Quicken Loans allows refinances of up to 200% of your home’s value on mortgages owned by Fannie Mae and Freddie Mac through the HARP Program.
In order to participate in HARP, either Fannie Mae or Freddie Mac must own your loan.
See if you qualify for HARP or call today (800) 251-9080 to find out how much you could save.
And finally, the Federal Government has extended HARP until the end of 2015.
Buying a home is one of the greatest accomplishments a person can achieve. The house is all yours. You can paint, remodel and tear down walls, if you want to. But, guess what? The mortgage payments are also ALL YOURS. This is why you have to make sure you’re doing everything possible to keep your mortgage payments as low as possible.
Saving money takes discipline. Unfortunately, I’m not as disciplined as I would like when it comes to saving money and taking it easy on the chocolate. If I had the necessary discipline, I would have kept my New Year’s resolution of more exercise and less chocolate. I probably would look like Sofia Vergara by now. But, I don’t – YET!
If you’re like me, you sometimes need help and motivation to reach your goals. Here are some tips to help you lower your monthly mortgage payment.
How to Lower Your Mortgage Payment
Of course, refinancing is a great option. You can save hundreds of dollars each month by lowering your rate. And now, with the new HARP guidelines, you may be able to refinance regardless of your current Loan To Value (LTV). This change will help homeowners who are current on their payments and are over 125% LTV. Previously, if your LTV went beyond the 125%, there was no way of refinancing.
With the new guidelines, you may be able to finally take advantage of the low interest rates! Keep in mind that not all lenders are able to offer this product at this time, but it’s expected that within the next few months, more lenders will join the list of approved HARP 2.0 lenders. The best place to start, if you’re interested in the HARP 2.0 program, is with your current servicing company – the lender to whom you make your mortgage payments each month. They will be able to tell you if you qualify and if they’re participating in this program. If they aren’t able to help at this time, just keep checking in with them as well as other lenders, to see when they’ll have this program available.
You probably read Clay’s article about “cash-in” refinancing and the increase of homeowners choosing to do this. It basically means you bring money to closing to pay down the principal amount of the loan. Many homeowners are choosing to do this in order to be able to bring their current home’s LTV down and be able to refinance, saving thousands of dollars on interest in the long-term.
Another well-known tip is reducing your mortgage term. You can choose to do it on your own,, or you can choose to go with a mortgage like the YOURgage, which lets you pick the term of your loan from 8 to 30 years. The YOURgage is a great option to reduce your total interest amount paid over the loan and, of course, pay off your mortgage faster.
If you’re disciplined enough to do it on your own, here are some tips to help pay off your loan faster:
- Put all extra cash inflows towards your mortgage principal (e.g., tax refunds, bonus money, etc.).
- If you’re buying a home with your significant other, buy a home based on one income only.
- Always pay a little extra each month, even if it’s a small amount. If you can’t do it every month, commit to make at least one extra payment each year.
- Sign up for biweekly payments. However, make sure that your lender doesn’t charge anything for this service. If they do, you can make biweekly payments on your own.
But, again, if you need a little extra push to achieve your goal, you can always choose a shorter-term loan, instead of the traditional 30-year mortgage. With the YOURgage, you can choose a term that works for you. Think about it, you can actually plan and coordinate to have your mortgage paid off with when your kids start college, for instance.
If, when you bought your home, you put a down payment less than 20 percent, you’re most likely paying Private Mortgage Insurance (PMI) or Mortgage Insurance Premium (MIP). If you’re currently paying PMI or MIP, you can ask your lender to cancel this insurance as soon as your mortgage balance falls below 80 percent of your home’s value (or 78 percent, if the loan is an FHA loan). This could happen either by your home value going up or you paying off some of the principal amount. However, keep in mind that you may have to pay for an appraisal in order to get the PMI or MIP taken off.
One positive side of falling home values is the fact that the tax assessment on your property can also go down. If you feel like the value of your home has decreased in the last year, you can appeal your assessment and lower your taxes. However, there’s always the risk that they say the value of your home is actually HIGHER. If this happens, you could end up paying more in taxes! So, try this only if you’re confident that the assessed value is lower.
Most homeowners don’t know that you can request your lender to recast your mortgage and save money. What does recasting your mortgage mean? It basically means that your lender will reset your monthly payment when you make large payments toward the principal of your mortgage. This means that the bank would reset your mortgage with the same terms but with a lower principal amount, leaving you with a lower monthly payment! If you’re interested in trying this, contact your lender and see if they do this. Also check if there’s a minimum amount you need to pay towards principle in order to move forward with your request.
Are you aware of other ways you could save money on your mortgage? Share them with us!