5 Ways to Reduce Your Mortgage Loan Costs

mortgageYou did it! You finally own your own home. But you’re realizing, after hidden costs and fees, and life hitting you with every financial curve ball imaginable, that it’s harder than you think to keep up with payments while building equity. Maybe it’s time to adopt a long term solution to reduce your monthly mortgage payment. Here are five basic tips to save money and reduce your mortgage loan costs:

1. Modify your loan

If you are experiencing financial hardship, you may be  able to modify terms of your loan (such as rate, term, or principal balance) to make it more affordable. Modification lets borrowers stay in their homes and continue to make adjusted monthly payments. To find out if you qualify, contact the servicer of your mortgage loan.

2. Add an extra payment once a year

To do this, set up a bi-weekly payment plan. If your monthly payment is $800, set aside $400 every two weeks. At the end of the year, you will have made 26 half payments, which is 13 full payments. Before you make extra payments, read your contract to ensure you won’t have to pay prepayment penalties. This is a sure way to shrink your mortgage loan costs.

3. Get your home reassessed

If you think your home’s value has decreased in the last year and it was not properly accounted for in your tax assessment, you can petition your assessor and fight your assessment. Lowering your tax assessment will lower your yearly taxes. Do some research on the value of your home. Visit the website of your local county tax assessor to get started.

4. Refinance

The most common way to reduce your mortgage loan costs is by refinancing to a lower interest rate. Reducing your rate can lower your monthly payment and help you save on interest payments. However, there are costs associated with refinancing so you want to be sure you are going to save enough to cover refinancing fees.

5. Reset or recast

Some lenders will reset (recast) your monthly payment if you make a large payment towards the principal of your mortgage. Your monthly payment stays the same, but the term of your loan shortens. When the loan is recast, your monthly principal and interest is recalculated so you end up with a lower monthly payment over the existing term of the loan.

Your monthly mortgage payment does not have to haunt you forever; save thousands by employing these simple tips or speaking with one of our experienced mortgage consultants today! Call 717.295.6685 or email info@LRRCU.org

Photo credit bank rate

Liz Oliver
Liz Oliver

Liz Oliver is the Member & Loan Services Officer at Lancaster Red Rose Credit Union. She’s been a member of the LRRCU team since 2007.