How to Lower Your Mortgage Rate Without Refinancing
A lower interest rate can lead to a lower monthly payment and save you thousands of dollars in finance charges over the course of your mortgage loan. You can receive a lower rate of interest by receiving a loan modification, if you are facing a hardship and you qualify. Some of the things considered to be hardships are loss of employment, serious illness or a death in the family. Refinancing can get you a lower rate but there will be substantial costs. With a loan modification, there are no fees involved.
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Instructions
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Call your mortgage servicing company to see if you qualify for a loan modification. Your home must be your principle place of residence. If you have investment property, you may qualify as long as you live in one of the units. Your mortgage servicing company will review all of the details to see if you are able to receive a loan modification. Your current mortgage payment must generally be greater than 31 percent of your gross monthly income to qualify for a loan modification, according to the Making Home Affordable website.
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Submit the proper paperwork. Your mortgage holder will need the loan modification application; the hardship affidavit and copies of your tax returns and recent pay stubs. All of these documents help the mortgage servicing company make a determination.
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Make your trial payments. To be considered for a loan modification, you must make the new payment three consecutive months in a row to complete the process. If you cannot make the new payment during the trial period, your request for a loan modification will not be approved.
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Tips & Warnings
Your mortgage servicing company will continue to lower your interest rate until your payment becomes affordable. The lowest rate you can receive as a result of a loan modification is 2 percent.
