How to Lower a Monthly Mortgage

Saving on your monthly mortgage payments can free up cash elsewhere.

Saving on your monthly mortgage payments can free up cash elsewhere.

Even if you could afford your mortgage when you purchased your home, financial circumstances can change for many reasons, such as job loss or illness. If you find yourself struggling to make each month's payment, rest assured that there are options to reduce your monthly mortgage. Since failing to make a mortgage payment is one of the worst things you can do to your credit score, finding other options is crucial.

Reduce your monthly mortgage payment by refinancing the terms of your mortgage to get a lower interest rate. A reduction of as little as a half of a percentage point can make a big difference in your monthly mortgage. For example, switching from a 6 percent interest rate to 5.5 percent will lower a monthly payment of approximately $1,200 by about $75. Those savings add up to $900 over the course of a year.

Increase the length of your mortgage. If you started out with a 15 year mortgage, extending the repayment time to 30 years will greatly lower your payments. Lending Tree gives the example of saving approximately $125 a month by extending a $100,000 mortgage from 15 years to 20 years, with the interest rate remaining at 6.25 percent.

Investigate the pitfalls of changing the terms of your mortgage. While refinancing or increasing the length of your mortgage may lower your monthly payments in the short term, lenders' fees may be high. Also, extending your mortgage from 30 years to 40 years means you'll pay interest for an additional 10 years.


  • In order to make the best decision, obtain an estimate of how much fees will cost you. NuWire Investor states that you can usually call a lending institution and ask for a Good Faith Estimate (GFE). This avoids running your credit and personal information until you settle on the right place for your refinancing.

About the Author

Julia Forneris has been a writer and editor since 2002. Her work has appeared in economics magazines such as "Region Focus" and on various websites. The editor of Scratch That! Editorial, Forneris holds a Master of Arts in literature from Virginia Commonwealth University.

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