When Will My Mortgage Go Down?

For most home-owning Americans, the most significant bill they pay each month is their mortgage, both in terms of total and impact. Owning a home means you are responsible for those payments to maintain ownership and accrue equity in your home. Decreasing the monthly payment can change the standard of living for your family, but it isn’t going to happen naturally. 

How a Mortgage Works

Your mortgage is a loan from a bank for the total cost of a property at closing. This may include more than just the cost of the house or land and, therefore, may be more or less than the property’s actual value. The property value will also be compounded with interest, which is contingent on the prime rate and buyer’s credit score. 

The total of the principal (what you paid) and interest is broken into monthly payments–a process known as amortization–which comprises your monthly mortgage payment. In the early years of your mortgage, most of your payment goes toward interest and less goes toward the principal. Unless you have an adjustable-rate mortgage, your monthly payments will remain the same for the length of the term. 

Lowering a Mortgage Payment

There are a few key reasons your mortgage payment will go down, but most will require some action to modify the monthly totals. 

Refinance Options

  • Extend Loan Term – by extending the loan, you can pay less each month, though you’ll be paying more in interest and take longer to pay it off. 
  • Lump-Sum – paying a substantial amount toward the principal and then refinancing can also decrease your monthly payments without increasing interest or loan term. 
  • Interest Rate – if the prime interest rate drops, you may be able to refinance to a lower interest rate, which can impact monthly payments. 

Additional Payments

Your mortgage payment might be combined with other elements, such as private mortgage insurance, homeowners insurance, and escrow. 

  • PMI – private mortgage insurance is required when less than 20% is given as a down payment. PMI is tacked onto monthly payments but goes away once 20% equity loan-to-value is reached. You can drop this by demonstrating that you have the necessary equity in your home. 
  • Insurance – shop around for your homeowner’s insurance, as rates are competitive and can be assessed differently. It isn’t likely to make a dramatic change but can lower your monthly payments. 
  • Escrow – most mortgage assessors also acquire money for insurance and property taxes on your behalf. The property taxes might not be properly assessed, so lowering the amount collected for escrow each month can decrease your payment. 

Get Your Payment Relief

If your monthly payment crushes you, there are plenty of options to mitigate the cost of a crippling mortgage. It’s possible to analyze each part of your monthly mortgage payment and to refinance to keep your existing loan but lower your payment. But if you’d rather drop your mortgage payment altogether, Fast Oklahoma House Buyers can help you with that. Our experts can buy your home now and give you your next step to freedom. 

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