Everyone likes to save money, right? And for most people the monthly mortgage payment is the most expensive outlay.
Your monthly mortgage payment which includes not just the principal and interest payment but also a monthly allotment for property taxes and insurance can take upward to one-third or more of a household’s gross monthly income and it’s logical for borrowers to find ways to lower their monthly expenses. Borrowers can refinance their existing mortgage to get a lower rate but those who could benefit from a lower rate probably have already done so. There’s more interest in refinancing out of a hybrid or variable rate loan and into a fixed as rates have been on an upward trend. But there are other ways to lower a monthly mortgage payment without refinancing. How?
Have you gotten your property tax bill? Property values have been on the rise over the past few years and with each increase in valuation means an increase in property taxes. But property assessments isn’t an exact science, it’s an estimate based upon recorded sales data in your neighborhood. The city or county doesn’t have the resources to send out an appraiser to get the current market value of your home but looks at recent sales in the area and then assigns a percentage increase in your taxes. But what if you disagree? What if the newly assessed value is say $400,000 and you think that’s too high? If you don’t dispute the new value, you’ll be paying higher taxes. Tax districts allow property owners to protest their new valuations which can result in a lower tax bill. To protest, you’ll need to provide your own data of homes that have sold in your area that more truly match yours.
When was the last time you talked to your insurance agent? Consumers groups suggest having an annual review of your insurance needs but for many the insurance bill is something that is paid each year from the mortgage escrow account. Call your insurance agent and ask for ways to save money on your various policies, especially your home owner’s policy while still providing needed protection. Just making sure there are smoke alarms in your home and fire extinguishers handy can make a small difference that will add up over time.
Finally, you can change your current loan to a longer term. If for example you have a 15 year fixed rate loan and want to lower your monthly payments you can refinance into a 20, 25 or 30 year term. Longer terms will have slightly higher rates but the monthly mortgage payment is much lower compared with shorter terms. In this manner, a homeowner can refinance from a 15 to a 30 year term and significantly lower the principal and interest payment.