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When you add up all the numbers, your monthly mortgage payment may seem like an affordable amount at the beginning of owning a home. Over time and due to a variety of reasons, you may find yourself having difficulty keeping up with your monthly mortgage payments. These payments should be 30 percent or less than your income, so a change in job or life situation can affect your ability to pay monthly and live comfortably. Luckily, there are often ways to lower these payments.
Extend your term
Increasing your payment term is one way to decrease monthly costs. Many places will allow you to extend your mortgage term from 15 to 30 years, or from 30 to 40 in some cases. This can save you a bundle over time, as you will be paying off the same amount of over a longer period of time. However, this may result in interest rates rising, so if you are thinking about taking this route, understand that a discount right now might mean more spent over time.
Put down more
One way to lower your payment at the initial purchase is to put down more money upfront at the start. Not only will that save you money on your monthly mortgage payment, but if you put down over 20 percent, you also do not have to pay for private mortgage insurance, which can save you money in the long run. Putting down more money may also get you a lower interest rate, which may only be .5% but will add up majorly over time.
Pay PMI at the start
If you were unable to put down 20 percent at the beginning, you’ll have to take care of your private mortgage insurance, which can add to your payments each month. However, you can pay your insurance upfront and save yourself the extra charges over time. This will equal the same amount of money spent total, but fronting the money will save you more monthly.
Rent your space
Having a tenant on your property may not be the ideal situation, but it would certainly give you extra cash each month toward paying your mortgage payment. If you’re someone who is lucky enough to have a mother-in-law suite or a double-block that’s half empty, you can use the rent acquired from a tenant to possibly pay the mortgage in full each month. If you can’t afford the space, think of renting out your home through Airbnb when you’re out of town. If you live in a larger city like Dallas or Seattle, rent out your place, or even your couch during some of the busier tourist times, such as during a big event.
If you have good credit, you can refinance your mortgage to lower your mortgage payment as well as your interest rate. Use this refinance calculator to see how refinancing your mortgage would be able to lower your monthly costs. This may not be an available option to everyone, but it never hurts to speak to an expert about refinancing.