Top 5 Ways to Lower Your Mortgage


By Barbara Pronin, RISMedia

Your monthly mortgage loan payment may be fixed, but that doesn’t mean you
can’t find ways to lower it, notes consumer finance advocate Sarah Tann.

Tann, a frequent contributor to consumer finance publications, suggests the top
five ways you may be able to lower your monthly payment:

• Improve your credit score – The better your credit score, the better
mortgage rate you can get. Don’t be sloppy about paying your bills. Pay them
all on time every month. Pay credit card bills off in full each month. If you
are carrying balances, work diligently to pay them off in full – or at least
lower your debt by 50 percent. Once you improve your overall score, you may be
ready to apply for – and get – a lower rate of interest on your mortgage.

• Get rid of PMI – If you did not put at least 20 percent down when you
bought your home, you probably took on private mortgage insurance (PMI), which
protects the lender in the event you default on the loan. Mortgages signed
after July 29, 1999 are automatically cancelled once you reach 22 percent
equity in the home. If you signed on for PMI before that date, you can cancel
it when you have 20 percent equity. The catch is you have to request that it be
dropped. If the shoe fits, call your lender.

• Take advantage of refi rates – Interest rates today are at historic
lows. If you currently have a rate of five to six percent or higher, and plan
to stay in your home for a while, now may be the best time to lower your
monthly payment by refinancing your loan at low- or even no-cost.

• Shop around – A mortgage is a product. Shopping, comparing and
negotiating with lenders to get the best terms possible can save you many
thousands of dollars. Get referrals from people you trust and shop around for
the best available deal.

• Take a shorter term – A fifteen-year mortgage will carry a lower rate
than a 30-year mortgage – often as much as half a percent lower. Of course, you
will be paying a higher monthly amount on the short-term loan. But if you can
afford to pay the higher monthly amount, you will pay your loan off sooner and
may save hundreds of thousands of dollars in interest over time. 
  reprinted with permission from RISMedia. ©2013. All rights reserved.