How to Lower Your Home Mortgage Payment

You can reduce both your mortgage payment and the monthly dread.

Your mortgage payment is always your heaviest monthly expense, covering principal, interest, taxes and insurance. Thus, when you find a home you want to buy, it is important to consider these costs and see if you can pay it comfortably without suffering ongoing financial strain. It is also important to employ a variety of strategies to lower your monthly payment as much as possible.

Instructions

1. Target a part of town with low property taxes. Though the price of your property will determine the amount of taxes you will owe, older and more established cities will have lower property taxes. Some of the newer cities will charge high taxes because such areas are still developing and need more money to fund all the new developments such as schools, roads, public facilities and more.

2. Make a larger down payment. When you are borrowing less from the bank, you will always pay less in principal and interest. A 5-percent interest rate might not sound like much but over the life of a 15-, 20- or 30-year loan, the amount can really add up. When the housing market becomes precarious, many banks are more cautious about home loans. Thus, it is to your benefit to pay at least 20 percent down.

3. Buy points. The higher the points, the lower the interest rate. Points are one-time purchases that you can buy from the bank in the form of closing costs. These closing costs are a one-time-only fee that you only have to pay when the loan finalizes. It is very beneficial to buy more points to get the lowest interest rate possible. A lower interest rate will effectively lower the monthly home mortgage payment.

References

• Mortgage Loan: Tips to Reduce Monthly Mortgage Payment
• Lending Tree: How to Lower Your Monthly Mortgage Payment