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This is the best way to reduce your monthly mortgage payment



Focus on big profits instead of small ones to save more in 2021. (iStock)

Inevitably, at the end of the year and after too much of a holiday season, the collective American consciousness turns to save money.

Many consumers are focusing on micro-adjustments to return more money to households’ monthly budgets: skipping lattes, reducing subscription services and planning more meals at home. Although these smart moves save money, in fact macro-corrections make the most significant difference.

One great way to save is to reduce your biggest expenses – especially your monthly mortgage payments. There is one thing you can do right now and notice quick results. Here’s what you need to know.

How can I reduce my monthly mortgage payment?

Due to the effect of the coronavirus pandemic on the US economy, interest rates are still at record lows. This means that homeowners who refinance over the next few months can shave hundreds of their monthly payment and effortlessly return more money in their pocket each month without requiring a coupon.

Are you interested in current mortgage refinancing rates? Visit Credible to see the many prices and lenders in minutes.

For beginner refinancing, there are many online mortgage calculators that can quickly illustrate the real numbers of how much money you could leave on the table without refinancing.

For example, let’s say you bought a home in 2016 and want to refinance $ 300,000 for another 30-year fixed-rate mortgage. The interest rate you received in 2016 was quite good – 3.75%, but now you meet the conditions for 2.75%. This difference of only 1% saves $ 263 on the loan each month and nearly $ 15,000 for the life of the mortgage.

To find out exactly how much you could save on monthly mortgage payments by refinancing now, reduce the numbers and compare interest rates using Credible’s free online tool. In minutes you can see what many mortgage lenders have to offer.

It is important to include all closing costs in your calculations, as this will affect when the new loan is “equalized” and real savings can begin. The calculator we recommend here takes these closing costs into account so that consumers can estimate the true cost-benefit when evaluating mortgage options.

WHY IS IT A GOOD IDEA TO REFINANCE YOUR MORTGAGE WHILE PRICES ARE LOW

What about the unfavorable market fee?

To summarize: in December 2020, in response to the refinancing surge, the Federal Housing Finance Agency began adding a 0.5% “adverse market fee” to all conventional refinancing loans over $ 125,000 sold to Fannie Mae and Freddie Mac. As the largest buyers of the secondary mortgage market, over 70% of mortgages are sold to Fannie Mae and Freddie Mac each year, which means that every home buyer should look for this fee, even if you’re not sure what to do. happened after you closed the mortgage loan.

With the unfavorable market fee, every $ 100,000 of refinanced money will cost an additional $ 500. However, if the difference between the initial rate and the rate you are currently receiving is large enough, this may compensate for the unfavorable market fee and then some. That’s why it’s important to shop for multiple lenders with Credible, talk to a loan officer, and perform accurate savings calculations.

“Is it a good time to refinance anyway?” Yes. Interest rates are currently very low, even with the built-in adverse market fee, “advises Casey Fleming, a Silicon Valley, California mortgage advisor and author of The Loan Guide: Getting the Best Mortgage. “If you can save money, don’t let the unfavorable market fee prevent you from doing so.”

With Credible you can get a complete picture of how much this new refinancing fee can affect you and your personal finances. Smash the numbers with Credible’s free online tools today to find out.

WHO is exempt from the new mortgage refinancing fee?

Other ways to reduce mortgage payment

If refinancing is not the best option for you right now, there are several other ways to reduce your monthly mortgage payment:

  • Rent rooms in your home for long-term tenants.
  • Consider Airbnb’s home list.
  • Sell ​​your current home. Moving over the next few months will qualify you for a new mortgage at record low interest rates.
  • When buying a new home, leave more money to reduce the amount you pay each month.
  • Consolidate debt to a personal loan with a lower interest rate. With the extra savings each month, you can add extra to your mortgage or increase those emergency savings.

See what personal interest rates you qualify for today to see if it makes sense to you.

EVERYTHING YOU NEED TO KNOW ABOUT PERSONAL LOANS

Reducing your monthly housing payment has a big financial impact. If the above ideas don’t sound appealing, refinancing can often be the fastest way to save, provided you find the right percentage and lender. Explore the available refinancing options in minutes by visiting Credible.


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