Lower Monthly Mortgage Payment
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- Refinance to Reduce Monthly Payments
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Multifamily
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Primary Residence
Vacation Home
Investment Property
Estimate credit score
Excellent 770+
Good 660-719
Avg. 620-659
Below avg. 580-619
Poor <579
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How to Reduce Monthly Mortgage Payments
You have put down money for your mortgage loan in California, you moved in, you made some repairs, and you finally feel like you have your place to live, your kids will have a home to come to, and your future seems as bright as ever.
But after a few years of paying off your mortgage every month, you might start thinking like this puts a strain on you. Your natural desire is to lower your monthly mortgage payment and keep more money in the bank. And the good news, it is possible, and there are several ways that you can do it.
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Ways to Lower Home Loan Monthly Payment
There are several ways to reduce your mortgage payment. Each situation is different, so you need to choose what you want to do depending on your circumstances.
If you need any consultation about how to lower your mortgage payment in Los Angeles or anywhere else in California, our team of experienced professionals we will gladly assist you.
Reduce Your Mortgage Payment with Refinancing
Refinance Your Home Loan
The first and the most obvious way to pay less for your house is refinancing. This is the most permanent solution. Refinancing is changing your current loan to the one with more attractive terms that will be more beneficial. If you decide to go for refinancing your mortgage, it is recommended to have a high credit score and about 20% equity.
A factor to consider when refinancing is if you want to lower your payment by lengthening the life of your loan. Think about the fact that you will stay in debt much longer and will pay more in interest.
Extend Your Repayment Term
This is the most straightforward way to reduce your mortgage payment. If you extend the term of your house loan, then you will need to pay less every month. This option is the best for those who need an immediate solution for their mortgage situation.
Get Rid of Your Private Mortgage Insurance
While your private mortgage insurance will eventually be canceled automatically, there is a way that you can get rid of it faster. Your PMI protects the lender against the risk that you will stop paying for your mortgage.
You can request an earlier cancellation when your mortgage balance reaches 80% of the original value of your property. For this, you need to have a good payment history, when you make your payments without delay. You also shouldn’t have any other debts, such as home equity loans or second home mortgages. You can also boost your home’s value with home improvements.
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Home Loan Refinancing Process
4 Easy Steps to Lower Your Mortgage Payments
Step 1 - Pre-Qualification
Talk to us to know your options.
Step 2 - Start Loan Program
We Shop – You Choose.
Step 3 - Pre-Approval
Get a loan approval on the terms you want.
Step 4 - Closing
Your goal is achieved!
Apply for a Mortgage Refinance Program
If you reduce your interest rate by only 1%, it will save you tens of thousands of dollars over the years. Besides, you will be paying less interest every month. If you consistently make your current payments on time, this improves your chance to receive a refinancing.
Refinancing is also a good idea for those who want to shorten the life of their loans. Ideally, you want to be free from mortgages by the time you retire.
Lower Your Mortgage Payment in California FAQ
How can I lower my monthly mortgage payment?
There are several ways to reduce your monthly mortgage payment:
- Refinance to a lower interest rate: Securing a lower interest rate can significantly reduce your monthly payment.
- Extend your loan term: Extending your loan term from 15 to 30 years, for example, can lower your monthly payments, though you’ll pay more interest over the life of the loan.
- Eliminate private mortgage insurance (PMI): If you’ve built up at least 20% equity in your home, you may be able to cancel PMI, reducing your monthly payment.
Can refinancing my mortgage help reduce my payments?
The answer is simply yes, refinancing can lower your monthly payments if you qualify for a lower interest rate or you are able to extend the loan term. For instance, if you refinance a 30-year mortgage at 5 percent to a new 30-year mortgage at 3.5 percent, your monthly payment will decrease considerably.
What is the impact of extending my loan term on my payments and overall interest?
Extending the loan term automatically makes your payments smaller because the repayment requirement is spread over more time. For example, refinancing from a 15-year mortgage to a 30-year will make your repayments smaller but increases by a third the amount you repay as interest over the life of the loan.
How does removing PMI lower my mortgage payment?
In most cases, you’d need to pay PMI if your down payment was less than 20%. When the equity in your home reaches 20%, you may request to take off PMI. This could save you hundreds of dollars a month and greatly bring down your mortgage payment.
What role does property tax reassessment play in lowering my mortgage payment?
Your property taxes are part of your monthly mortgage payment. You can appeal for a reassessment if you feel that your home’s assessed value is set too high. Once you have a lower assessed value, you will end up paying less in property taxes, which reduces your monthly mortgage payment.
Can modifying my loan terms lower my mortgage payment?
A loan modification program is where a few lenders will change your loan terms in some manner or form to make your payments more affordable. It can be done by prolonging your loan term, reducing the interest rate, or adding missed payments to the loan balance.
How does paying down the principal balance affect my mortgage payment?
Paying additional money toward your principal can help lower your loan balance, possibly letting you refinance into a lower interest rate or shorter term. This will mean smaller payments over time.
What should I consider before attempting to lower my mortgage payment?
Consider the following:
- Closing costs: Refinancing and loan modifications generally entail closing costs, which a homeowner should balance against the savings he or she would realize.
- Long-term financial goals: Extending your loan term will lower your required monthly payments, but you’ll pay more in total interest on your loan.
- Credit impact: Your credit score should be good enough to guarantee you the most competitive refinancing rates.
For specific advice on reducing your mortgage payment in California, contact a mortgage advisor who can best review your individual situation and walk you through options that fit your needs.
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