How to cut my monthly mortgage payment amount?Answer:
Reducing the monthly mortgage payment amount will be possible in several ways. Even though a great part of paid mortgage interest is tax deductible, mortgage payment is perhaps the greatest expense for many households and it doesn't hurt to reduce it.
Effective Ways to Cut Monthly Mortgage Payment Amount
Making a greater down payment is a great way to reduce mortgage payment. However, sometimes borrowers follow the realtor's urge to get ‘more house' and take out more than they need. In that case, instead of using the down payment to reduce mortgage LTV, the mortgage payment and pay less or none PMI, they go for a bigger loan and respectively bigger mortgage payment amount.
Prepaying points at closing is one way to reduce the mortgage payment. Even it involves some more cash upfront, your monthly mortgage payment gets reduced as effectively as extending the loan term. Prepaying points, however, may not work if you are not a prime borrower interested in long-term stay at the property. The good thing is they are fully tax-deductible in most cases for a primary home purchase, which is what most borrowers are concerned with.
Extending the loan term is another way to cut mortgage payments. There are 40- and 50-year mortgages offered in high cost areas to help cut the mortgage payment. The reduction, however, is often not big enough to be appealing and most borrowers would refinance when appropriate.
Taking a prepayment penalty in exchange for lower rate and refinancing into a lower rate home loan or into an Interest-Only loan or Option ARM are other ways to cut your rate and/or monthly mortgage payment amount.
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