Want to know how to get a lower mortgage payment? We’ve got you covered…

Maybe you are looking to move and get a new home loan. Or maybe you are now in a better or worse financial situation than when you bought your home in Seattle, and now want to lower your monthly housing payments. Check out these tips…

1. Refinance To Lower Your Rate & Payment

Interest rates may have gone down since you purchased your home. We are currently experiencing historically low rates and that isn’t going to last forever. You may now qualify for better rates, especially if your credit has improved and you’ve built up a little more equity in your home.

You may also be able to elect slightly different loan features to reduce your mortgage interest rate and payment even further. One of these options is to choose an interest only loan.

2. Refinance & Extend Your Loan Term

Maybe you thought taking a shorter term loan sounded like a good idea when you purchased your home or last refinanced your mortgage. It can be a great ideal to pay off your home sooner. However, taking a 15, 20 or 25 year mortgage loan also means higher monthly mortgage payments.

By refinancing to a 30 year mortgage now, you can significantly lower your house payments. That doesn’t mean you have to stick with it for 30 years. It just buys you the flexibility when you need it. You can always pay extra directly towards the principal when you are flush. Refinancing may also help you buy a month or more without a payment so you can get ahead too.

3. Refinance & Consolidate Your Debt

Maybe it isn’t just your mortgage that is weighing you down and stressing you out. Maybe emergencies have popped up, or your home renovations ran over budget. Now you’ve taken on a lot more debt or run up those credit cards. They are eating you up with interest every month and it’s hard to get ahead. If only you could reset, you’d be fine.

A debt consolidation refinance could be exactly what you need. It is important to be careful when adding any debt to your primary residence. Yet, if your other debt brings you down, it may only be a matter of time before you lose your home too. If you have more than one mortgage, outstanding car loans or personal loans and credit card bills, it may be smart to consolidate that debt, reduce the interest and your monthly payment. Then you can get back on top. Do this before you risk becoming late on a payment, become maxed out, damaging your credit and sabotaging any opportunities you may have had to refinance and improve your situation.

4. Ask For A Loan Modification

A loan modification simple modifies the terms of your current loan. It is not a new mortgage or refinance. Modifications are typically reserved for borrowers who are already struggling and for times when the whole market is in trouble.

Modifications were popular in the wake of the 2008 Great Recession and housing crash. Lenders are much less likely to grant them, or the types of terms offered then today. It’s not impossible, especially if you loan has recently been transferred to a new note holder or loan servicer. It’s worth asking, but it is far better to refinance before you get to this stage.

5. Ditch The Mortgage Insurance

If you needed a higher LTV loan when you bought your home or last refinance your mortgage you may have had to get mortgage insurance (MI). That may be adding $50, $100 or more to your monthly payment.

You original mortgage loan documents will spell out when you may be eligible to end that coverage and request for it to be removed. Generally this is once you’ve achieve at least 20% equity in your home.

Every penny counts. If you can get that taken off, you can also apply that extra money to your principal and pay down your loan balance faster when you have that extra money.

6. Pay Your Own Taxes & Insurance

Mortgage companies will often include monthly escrows for your annual property taxes and homeowners insurance as a part of your payment. They are supposed to collect them and keep them in escrow until the annual bill is due, and then pay the bills themselves. This keeps them protected by ensuring the money is there each year.

It also means that you are missing out on having that money all year and earning interest on it. Some loan servicers haven’t achieved a great record for actually making these payments on time themselves either. If you can change this arrangement you’ll have more financial flexibility each month. You can also make sure you home isn’t at risk of loss due to their failure to pay.

Just make sure you set aside the money when you can. Failing to pay your homeowners insurance can be a default on your mortgage. Failing to pay your property taxes can result in additional financial penalties and falling into foreclosure.

7. Increase Your Income

When you can’t reduce your expenses any further, your only other option is to increase your income.

One of the most obvious ways to do this as a Seattle homeowner is to rent your place out on a site like Airbnb. This might just be your couch for a weekend. It could be your spare room for the long term. Or it could be renting your whole place out for a few months while you go camping so that you can catch up and reset your finances.

Just make sure you check your mortgage documents and that you are allowed to do this.

8. Downsize

Maybe it is time to down size? A smaller home or at least one in the Seattle suburbs could not only mean a smaller mortgage, but also lower taxes, insurance and utility bills. You can rent or sell your current place and maybe even enjoy not having as much cleaning to do.

About the Author

Helping Seattleites buy their dream homes for over 15 years. Founder of Seattle's Mortgage Broker and author of Homeownership Simplified: The Truth about ZERO Down.