How to Reduce a House Payment without Refinancing

You can reduce your monthly house payment

Refinance is the common way to reduce a mortgage payment, but there are other ways you can reduce a payment on real estate, too.

If you do not refinance, you cannot reduce the principal and interest because that is your contract, but you can reduce the escrow payment.

You probably know that the principal and interest on your home are set by contract, and that is the P and I. Taxes and Insurance make up the other two elements to form PITI.

Difficulty:

Moderate

Instructions

Things You'll Need

• A mortgage on your home.

1. Look at your payment information and see how much you pay in principal, interest, taxes and insurance. Pay special attention to the taxes and insurance. If your taxes are high, act the next time you get a tax notice from the county assessor.

2. Protest your taxes if they are high. Remember that the amount you pay per month is only one-twelfth of the total for the year. If you lose a protest, you can appeal. See Resources below for information on how you can do this.

3. Be sure you are claiming a HOMESTEAD EXEMPTION if it is allowed in your state, and if you are living in the home. Many homeowners are not aware that they can reduce taxes by this method.

   If you are nearing sixty-five, be sure that you have your taxes reviewed and frozen if your state allows it. Some states permit taxes to be frozen at a given rate when the homeowner claiming a homestead exemption reaches a certain age. The age may vary, as do the rules, but it is worth calling your county assessor's office to check on this.

4. Contact your mortgage company to remove the PMI insurance if you have made payments promptly and have paid twenty percent of the principal. This is the Private Mortgage Insurance that is required, but does not cover YOU. It covers the lender. If you have not paid down the loan to the twenty percent mark, make payments in addition to your regular payment (separately) and mark it FOR PRINCIPAL ONLY. Once you have reached pay down to eighty percent of the original purchase price or appraisal at time of purchase, request removal of PMI coverage. Your lender does not have to notify you until you have paid at least 22 percent.

5. Check the cost of your homeowner's insurance. If it is high, look at possibilities for reduction of the monthly and yearly cost charged to your escrow. Here are some possibilities: You might raise the deductible so you pay more if you have a claim. Actually, this may be good because small claims often increase your rates far beyond the payment you receive. You might be able to reduce the outbuildings or contents coverage if your contents or outbuildings are not as valuable as they show. Look carefully at the policy and see where cuts could be made, and call your insurer to discuss the options.

Tips & Warnings

• There is nearly always some way to reduce your mortgage monthly payment. You may see some possibilities by looking at your payments and your homeowner's insurance policy.

• copyright 2009 Linda Richard

• Rules vary from state to state, but the Federal law is the same wherever you are.

Resources

• Protest Real Estate taxes
• Appeal Real Estate taxes