3 Ways To Lower Monthly Mortgage Payments

Q: They cut my hours at work, so I’m not bringing in as much money right now. Is there any way to lower my mortgage payment? Henry, Kearny, NJ

A: Monthly mortgage payments have 3 components: payment on 1) the mortgage loan 2) the property taxes 3) homeowner insurance. Some homeownership costs are actually flexible. Knowing where you can lower your monthly home-related expenses can save you a lot of money. Here are 3 mortgage-related costs that you can reduce:

1. Homeowner Insurance

Lenders require borrowers to get and pay for homeowner insurance on a mortgage loan–if you don’t the bank will put a forced placed insurance policy on your home and charge you for it (note: forced placed insurance is often twice as expensive). The key to lowering your homeowner insurance expense is to shop around. Get at least three quotes from an independent insurance broker who can shop multiple carriers. Shopping around can save you hundreds of dollars per month on homeowner insurance. One way to potentially lower your homeowner insurance expense is to bundle it with an automobile insurance policy because insurers often offer discounts when you do. Also, you can lower your monthly homeowner insurance expense by raising your premium deductible.

2. Property tax appeal

Though you can’t change your property tax rate, you can challenge an inflated property tax valuation. In order to challenge an inflated property tax valuation, you should research comparable sales in your neighborhood. If your home’s assessed value is significantly higher than similar properties, file an appeal. If you win the property tax appeal you can save thousands of dollars annually.

3. Mortgage loan structure

The structure of your mortgage loan plays a big role in how much you have to pay every month. The core choice when getting a residential mortgage is often between a conforming loan based on Fannie Mae/Freddie Mac standards and a non-conforming loan (i.e. jumbo). Beyond negotiating individual costs, your mortgage loan structure itself offers opportunities to reduce monthly expenses.

Shopping around for a mortgage from different lenders is prudent and smart. Pay special attention to mortgage loans that can work specifically for you. For example, VA loans offer no PMI (private mortgage insurance) and no down payment for eligible veterans. Also, some states and cities offer grants for first-time home buyers.

You have to explore as many options as possible in order to see the full picture available to you in order to reduce your monthly home-related expenses. Thanks for your question, Henry.& lower mortgage interest rates, challenges for entry-level homebuyers will persist, the most prominent being coming up with the down payments to buy. Thanks for your question, Yanky.

For more real estate tips and information, visit my blog at geraldlucas.com.