A home should be a place of sanctuary; somewhere that makes you feel relaxed and at ease. However, for many people, a home can often feel like a ball-and-chain because of how high their mortgage is. This prevents them from engaging in fulfilling activities and traveling. With time, this can make a home feel more like a prison. Individuals in this situation don’t have to go on living this way, though. There are plenty of tips and tricks that can provide you some financial leniency and take some of the pressure off. Here are some ways to get a lower monthly payment on your mortgage…
What determines your mortgage payment
Essentially, your mortgage payment is determined by a handful of factors. The first of these is the principal balance, which is the actual value that you borrowed to pay for the home. The second is the interest rate, which goes towards profit for whomever you borrowed money from. The third is property taxes, which are affected by regional influences. The fourth is PMI, or private mortgage insurance, which financially protects you if the home is damaged by fire or a natural disaster. And the fifth is the time-line of the mortgage, which determines how long it will be until you pay off the home.
Extend your mortgage
The first thing that you can do to try and lower your monthly payment is actually extend the timeline of the mortgage. Mortgage timelines are usually done in 15, 30, or 40 year mortgages. The longer that this mortgage is, then the less that you must pay towards it every month. This option is highly dependent on the flexibility of your lender, although there are many lenders who are understanding of situational changes. However, this option is typically better left as a short-term solution until you can pay more, as it means that you will be paying much more in interest, over the long-term. If you decide to extend the timeline of your mortgage, then be sure to refinance to a shorter timeline as soon as you are able to.
This article will continue in part 2.