The economy has changed within the past five years, and many home buyers are on a quest for the lowest mortgage payment possible. There are various avenues to pursue when looking to lower your mortgage payment. With a little research and time, you may save hundreds of dollars a month on your mortgage.
Before you start contacting mortgage companies or other businesses to discuss lowering your mortgage payment, do some research on the Internet. You should be familiar with mortgage industry terms and have a basic knowledge of how a first and second mortgage work. It is difficult to make an informed decision without knowledge of what you are researching and what you are trying to accomplish.
After you have done your research, contact your current mortgage company to ask about refinancing your current mortgage. Most mortgage companies offer refinance packages; however, credit usually comes into play when refinancing a current loan. If you do not have stellar credit or even mediocre credit, this may not be an avenue that you are able to pursue. Depending on the mortgage company, some have refinance programs for those with fair or poor credit or refinancing based on the current value of the home (vs. the balance of the current loan). For example, if you purchased your home five years ago for $300,000 and currently owe $279,000 but the home is only worth $230,000, you may be able to refinance the home for $230,000.
If you find that you are struggling to pay your mortgage each month (and you are behind or about to be behind on your mortgage), many mortgage companies have “financial hardship” programs. Financial hardship programs entail the borrower providing pay stubs, bank statements and completed financial hardship paperwork to the mortgage company for review. Upon review (based on the information provided), the mortgage company will determine if a lower mortgage payment is a possibility. Financial hardship program information can be found on most mortgage company websites.
There are businesses out there that will work with your mortgage company as a “middle man” to help in lowering your mortgage payment by doing all of the legwork for you. The pro in this type of arrangement is that the business or middle man is usually very knowledgeable of mortgage industry terms and law pertaining to the mortgage industry. The con is that there may be a fee up front, anywhere from $500 up to $5000 for this type of service.
Decreasing the annual percentage rate of a mortgage by even 1/2 percent can save you hundreds of dollars a month on your mortgage. Even if you are not struggling to pay your mortgage, it is always a good idea to shop around for the best interest rate.