If you want to reduce a monthly mortgage payment, but don't want to refinance, you have a few options. You may be able to find some savings by reducing your insurance or tax payments in your account. But to get a larger reduction, you'll probably have to talk to your bank. In some cases, banks will reduce interest rates to keep you as a customer, or you can recast your loan by paying a large portion towards its balance.
Talk with your insurance agent about your homeowner's coverage, if you pay your insurance as a part of your monthly mortgage payment. Adjusting your deductible upwards, or changing to a different insurance carrier with lower rates, could reduce the cost of your insurance and bring down that portion of your monthly payment. It's also a good idea to review your coverage and make sure you have the right amount. If you carry too much coverage, reducing the size of your policy will also save you money.
Appeal your property's assessed value for property taxes. If your property's assessed value is too high, your local tax authority might allow you to appeal its assessment. If you can prove your case, the assessed value of your home -- and your property taxes -- will be reduced. This in turn can reduce your monthly mortgage payment if your property taxes are included in the payment. Property tax appeals can usually only be done in a set window of time after you get your property tax assessment statement. If you aren't comfortable doing it yourself, you might be able to find an attorney who can file the appeal on your behalf, though you will have to pay attorney's fees.
Talk to your lender about an interest rate reduction. If your interest rate is above market, your lender knows that you can refinance it with another lender. Some lenders would rather reduce your interest rate than lose you as a customer. Typically, the process of asking for an interest rate reduction starts by calling the customer service department and letting the representative know that you are considering refinancing to a lower rate, and that you're wondering if the lender can do anything to hold on to your business. While the lender can always say no, some will say yes. If you are able to get a lower rate this way, you will probably have to complete some paperwork and may have to pay a processing fee.
Recast your loan, if your lender allows it. When you recast your loan, you make a large payment toward its balance and your lender recalculates your payments so that the loan will be paid off in the same amount of time. Since you owe less after the large payment, your monthly payments will go down. Not every lender offers recasting, and many charge a fee to set it up, but it's still a way to lower your payments on your existing loan.
- USA.gov: Homeowner and Renter's Insurance
- Bankrate.com: Property Taxes Too High? Get Help
- Forbes: Get a Better Mortgage Rate Without Refinancing
- Five Cent Nickel: Recasting or Shortening Your Mortgage – Pros and Cons
- MakingHomeAffordable.gov: Home Affordable Refinance Program (HARP)
- MakingHomeAffordable.gov: FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance)
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