Mortgage rates are at a historic low and the time is ripe for buying a home. Mortgage market is always a buyer’s market. If you already are a homeowner, it is the right time to consider refinancing your existing mortgage. Buying a home for the first time or refinancing your existing mortgage is an important decision and it needs plenty of planning. The most important element is to work out the best technique in order to reduce monthly payments on mortgage.
You don’t need to be a professional to lower your monthly payments on your mortgage. You can look for sources of mortgage information available online and talk to a lot of people who are working in the mortgage lending and real estate sector.
There are various techniques that you can apply to reduce monthly payments on mortgage. However, two of them have proven to be the most effective among them and they are as follows:
1) Get rid of private mortgage insurance
The first technique to reduce monthly mortgage payments is by avoiding or eliminating private mortgage insurance (PMI). If you make a down payment of less than 20%, most lenders would necessitate you to buy PMI. This can considerably raise your monthly mortgage payment. The most clear-cut technique to stay away from PMI is making a down payment of 20% or over. Nevertheless, this is hard for most mortgage borrowers. A probable substitute to keeping away from private mortgage insurance is what is known as a piggyback mortgage. It is basically a first loan with a second loan and both loans close simultaneously. More often than not, the first loan would be for 80%, the second loan for 10% and the rest 10% is the down payment made by the borrower.
If you don’t even have the ability to make a down payment of 10%, some lenders would permit the second loan to be for 15% or 20%. Remember that it’s not easy to find such lenders and everyone wouldn’t be eligible for those terms. Nevertheless, when you’re trying to reduce your mortgage payments, this endeavor deserves it.
2) Stretch out the repayment term
One more technique to reduce your monthly mortgage payments is to extend the loan term. Some lenders would allow the common 30-year loan to stretch out to 40 or even 50 years. This would definitely raise the interest rate and the debt would remain for more time but the encouraging thing is that this technique would reduce mortgage payments.
If you have any confusion, you can discuss with a trustworthy loan officer, lender or financial advisor. Always take your time and make a knowledgeable decision.