10 Simple Ways to Lower Your Mortgage Payments

1) Pay Mortgage Debts twice a Month

The principal on your mortgage and the rates on mortgage insurance, will reduce when you make mortgage payments twice a month rather than at the end of the month. This does not mean you pay extra, just break the amount you owe in a month into two halves, such a minor change will influence your credit score since it counts as healthy financial behavior. An easier way to archive such a goal would be to automate payments towards your mortgage. Since mortgage insurance is based on outstanding balance, paying twice a month would bring down your insurance.

2) Think of your Current Mortgage Plan as a Short Term Commitment

Trying to decide between fixed rate mortgage, adjustable rate mortgage and interest-only loans is a difficult debate to conclude effectively, but the bottom line is that fixed rate loans might cost more now but will end up costing less in the years to come. But you can always choose to refinance once an adjustable rate mortgage goes up, or pay up on principal payments in interest-only loans. This is an option open to those with long term goals of refinancing a house or to investors who flip houses within a certain period of time.

3) Updating your House increases LTV

If your house has a loan to value (LTV) of 80 percent, mortgage insurance can be negated. But if you don't fall within this category, remodeling your house could increase its value helping you cut costs once mortgage insurance is removed. As a rule of thumb, most remodeling work that increases square feet area and improves the living space in a utilitarian way will count towards LTV. This includes; modernizing old bathroom, increasing the number of bathrooms, updating kitchen spaces. Bringing down mortgage insurance premiums or completely negating it, does save a bundle on your monthly mortgage payments.

4) Opting for Federal Loan Modification Programs

Opting for a Home Affordable Modification Program (HAMP) will assist borrowers experiencing financial difficulties. Federal Loan Modification Programs can be accessed through your lender, it works by increasing the term of the loan by modifying the principal into figures that are easier to pay. Borrowers should expend other option before applying for Loan Modification, since the eligibility requirement for each plan differs.

5) Reduce your Mortgage Insurance

There are a few ways to eventually reduce your mortgage insurance from your mortgage debt, the first is to make two payments a month towards your mortgage. This can become a feasible goal if one partner pays the mortgage on the 1st of every month and another partner pays up on the 15th of the month. Further, by paying your mortgage twice a month, the principal balance on your loan decreases, enabling you to pay much less as interest. In addition, the equity of your home will raise and you can cash in on the equity by refinancing the mortgage. Any extra money that comes in during a year, can be used to gain leeway on the principal amount of your mortgage, thereby reducing mortgage insurance sucessfully.

6) Get 20 percent equity on your house

Homeowners who did not put down 20 percent, of the value of the house when they brought it, will pay mortgage insurance in addition to their monthly mortgage payments. If you manage to repay your mortgage to meet the 20 percent mark on the home's equity, you can apply to have your mortgage insurance removed. Lenders often send an appraiser to conclude on the equity of the house when applying to have your mortgage insurance negated. This simple step will reduce your monthly mortgage payment and increase savings.

7) Buying discount points

One discount point equals one percent of the principal amount of your mortgage, and buying these points can bring down your mortgage payments for a month. Mortgage lenders allow borrowers to purchase a maximum of three discount points, you would have to pay .25 percent rather than .125 percent. In opting for the three-point discount, you avail a reduction of an entire percent to the total rate of interest on your loan.

8) Recasting your Mortgage to avail lower payments

Borrowers chose longer mortgage terms to brace for any eventualities that might happen and effect their ability to make payments. A 40 year mortgage does not take 40 years to pay off, a borrower would usually try to pay it off in ten to fifteen years. Loan recasting would allow you to pay off your loan in 40 years, thus drastically reducing the monthly amount on your mortgage. This is an option to tide you over during hard times, such as job loses or difficulties as a result of failing health. Loan recasting does include a small fee.

9) Choosing to pay Mortgage Insurance in bulk

Instead of paying your Mortgage Insurance every month, you can pay the full amount in bulk when you opt for the Mortgage. This reduces the entire amount of the Mortgage insurance to a few thousand dollars, which saves you almost half of the amount charged on monthly payments.

10) Keep an eye on property taxes

Home loans that have an escrow will cost a bundle in property taxes, they are charged depending on the value of your house and land. These taxes are taken out of your monthly mortgage payments, and might reduce your ability to pay off the principal amount in a given period of time. If your taxes are high, which is something people inhabiting urban spaces experience, since the assessment is conducted for tax purposes and is different from an appraisal, you can always take the matter up with the State Board of Equalization.