How to Lower Your Mortgage Interest Rate Without Refinancing

The interest rate on a mortgage can be lowered even if a homeowner does not refinance

Lowering the interest that is paid on a mortgage will leave more money in your bank account each month. When it comes to saving money on your mortgage payments, there is no need to refinance your property, because there may be better options for homeowners who know where to look. If you have no desire to refinance your home, want to eliminate the costly closing costs that occur during such a transaction, and do not mind doing some research, you may be able to lower your mortgage interest rate.

Instructions

1. Document your reasons for seeking a lower rate. If you have recently suffered a loss of wages, severe medical situation or some other type of challenge that is causing you an extreme amount of hardship, you need to let your lender know the details of what has occurred. Once your mortgage lender has seen any supporting documentation that you can provide, such as hospital bills, evidence of a reduction in work hours, and other relevant data, it will determine whether you qualify for assistance.

2. Take an active role in the interest rate reduction process. Do not wait until you are seven months or more behind on your mortgage payments before you reach out to your lender for help. The time it will take for the bank to sift through all the data, deal with all of its current clients and verify any needed information can be measured in months, so it is better to get the ball rolling early, rather than put things off until a later date.

3. Ask your lender for a "loan modification" to change the terms of your mortgage. A loan modification alters the terms of your loan so that it is easier to handle, and can often mean a reduction in your rate of interest. The lender may even choose to reduce your principal as well. A loan modification is especially helpful to those whose interest rate has skyrocketed because of an adjustable-rate mortgage (ARM) loan.

4. Be specific when speaking with your mortgage company. Tell the lender with whom you speak exactly what you want to accomplish with your loan modification. For example, tell the lender what amount would be comfortable for you to pay each month. There is no guarantee the company will accept your terms, but at least it will clearly understand your intentions.

References

• Hud.gov: Loan Modification Frequently Asked Questions