What combination of factors would result in the lowest monthly mortgage payment?

When it comes to property purchases, a number of people resort to getting a mortgage. There’s an important question that both prospective property buyers and current property owners need to ask and know the answer to; and this is, “What combination of factors would result in the lowest monthly mortgage payment? Because, when you know the measures and options you can take in lowering your monthly payments on a mortgage, you are able to plan your finances more strategically. And, should you find yourself in a difficult season with your finances, you’d be able to ease up on the overall household budget by lowering the mortgage payments.

On another note, high mortgage payments tend to eat up a large portion of your earnings, which could leave you with limited funding for the regular and ordinary living costs you need to shell out each week. That’s why lowering mortgage payment costs can help you achieve a more balanced and less stressful means of expending your financial resources.

So, what combination of factors would result in the lowest monthly mortgage payment? There are actually several considerations and options you may pursue individually or in combination:

1. Refinance.

When you refinance, you get a new mortgage that will pay off the first loan. This leaves you with the obligation of just paying for the second loan (new mortgage) which can carry a lower interest rate, better payment terms, and lower monthly payments compared with the previous mortgage. You can consider refinancing especially when you have good credit.

Avoiding taking numbers at face value. Calculate the costs and differences between the existing mortgage and the new one to verify whether the terms of refinancing are indeed viable and more advantageous for you.

2. Request to extend the term of your loan.

There are trusted and reasonable mortgage lenders that allow this arrangement with borrowers. Instead of refinancing your mortgage, you can request to extend the payment term. This grants you more time to pay off the loan and also lowers the monthly payments you need to make. You also get to avoid property foreclosure.

Naturally, a 15-year mortgage will result in lower monthly payments as opposed to a 10-year mortgage. Bear in mind though that the interest payments will run higher the longer you delay in settling the principal amount. So do consider this option carefully.

3. Place a significant down payment.

You may put down a minimum of 20 per cent down payment. But, if you have the means to give more, why not go ahead and place a larger payment instead? Doing this will lower your monthly mortgage and save you a good deal on interest costs. If you are expecting a bonus or additional income at work, you can opt to delay in making a purchase. Pool more funds first so you can make a sizeable down payment later on for your property purchase.

Another good thing about giving more than 20 per cent on a down payment is that you wouldn’t need to pay for private mortgage insurance. This is a normal requirement when home equity hasn’t reached 20 per cent yet. Make the 20 per cent down payment so you get to enjoy significant savings.

4. Prioritize hitting a 20 per cent equity in your home.

Land values tend to increase over time. But don’t just wait for the value of your home to increase via assessment (or valuation). Consider personally prioritizing the down payment and initial mortgage payments early on. As mentioned earlier, the sooner you reach 20 per cent home equity on your purchase, the earlier you can get rid of your private mortgage insurance (PMI). It can be stressful on your finances when you have to manage both PMI and regular mortgage payments at the same time. So, get rid of the private mortgage insurance as soon as you can by repaying enough of the mortgage till you reach 20 per cent of home equity. Make an appraisal request from your lender when you’ve hit the target then request the PMI removal once you’ve confirmed it.

5.  Lower monthly payments by paying interests only.

Some lenders allow the arrangement of interest payments only during the early loan period. You may get an option to initially settle interest payments and not pay off the balance immediately. This interest-only loan is a good option for those who’ve made a large down payment and are in need of some time to get their finances in order. You may best consider this option as a temporary measure and endeavour to set a target date by which you will begin increasing your payments and start paying off the rest of your mortgage (the principal amount plus interest amount). Remember, the earlier you lower the mortgage’s principal amount, the more you get to save on interest costs.

6. Request a home property tax re-assessment.

Tax assessment rates how much your property is worth. (Note that this is different from appraisals. The county makes the assessment while private companies make the appraisals.) Property tax rates can greatly add to your mortgage obligations. So consider requesting for a repeat assessment especially if you are paying high taxes. It is good to have this checked because some homes can be overvalued. At times, land values decline due to rezoning or other issues. That’s why it’s good to check that the value of your land is up to date.

Explore filing a request to validate the worth of your property. You may be able to lower your property tax along with the mortgage payments (since lenders would normally collect the property taxes each month) should there be a need for some adjustments. Remember to file the assessment request with your respective county.

Note that with lowering land values, homeowner’s insurance would also go lower. This means lower mortgage payments and additional savings for you.

7. Make some money from unused space.

Your home can help pay for your mortgage when you rent out unused areas like an extra bedroom, spacious storage or even a basement. You can also put up an additional unit if your lot has a free section. Getting a tenant to rent provides you with additional and steady funds that can help cover your monthly mortgage payments.

8. Rent out your entire home, unit, or property.

You can purchase a property and rent it out initially. This option may literally allow the property to pay for itself and even pay for the place you’re currently renting in. Later, you may opt to move in when the mortgage is near or fully paid. Consider this option especially when you have money saved up and are looking for a solid investment. This is also a good option for singles or for small family units who can manage renting modest or smaller residences while they’re still renting out their purchased property to cover for the ongoing mortgage.

9. Settle the cost of Private Mortgage Insurance (PMI).

If your funds are sufficient, consider immediately settling the full cost of private mortgage insurance on your home. When you make a one-time payment, you no longer need to pay additional amounts on top of your mortgage every year. Consider this option to at least cover the full amount of mortgage insurance especially when you don’t plan to put up a 20 per cent down payment.

10. Request for a loan modification.

With loan modification programs, a borrower may be granted allowances on their current mortgage. Consider applying for one when you find yourself in a financial crisis. Lenders may grant a short term and even a long term reduction in interest rates, payment amounts, or an extension on term or dates as long as you meet the given eligibility requirements.

11. Increase your monthly mortgage payments.

Whenever extra funds come in, devote a good amount into making additional mortgage payments. Paying more than what is required every time you can means you get to finish off your mortgage obligations sooner. And when you do this frequently, you will lower interest costs significantly.

12. Discipline yourself towards making regular payments.

Do whatever you can to ensure that monthly payments are met. You may need to put the mortgage on top of the list, meaning, it’s where your income and bonus go to first. It’s the amount that you deduct and set aside first and foremost. When you settle your monthly mortgage payment, you spare yourself from having to pay additional interest costs, fines or late charges, and other costs.

In addition to these 12, there may be other options you can factor in to lower your monthly mortgage payment. As with any loan or financial obligation, you’ll want to come up with a strategy that will decrease both interest rates and the principal amount. You’ll also want to be able to close the mortgage at the shortest possible time. Always calculate costs before making your purchase. Or if you have an ongoing mortgage, sit down and find ways to repurpose your finances so you can avoid paying more than what you have to.

When it comes to property purchases, a number of people resort to getting a mortgage. There’s an important question that both prospective property buyers and current property owners need to ask and know the answer to; and this is, “What combination of factors would result in the lowest monthly mortgage payment? Because, when you know the measures and options you can take in lowering your monthly payments on a mortgage, you are able to plan your finances more strategically. And, should you find yourself in a difficult season with your finances, you’d be able to ease up on the overall household budget by lowering the mortgage payments.

On another note, high mortgage payments tend to eat up a large portion of your earnings, which could leave you with limited funding for the regular and ordinary living costs you need to shell out each week. That’s why lowering mortgage payment costs can help you achieve a more balanced and less stressful means of expending your financial resources.

So, what combination of factors would result in the lowest monthly mortgage payment? There are actually several considerations and options you may pursue individually or in combination:

1. Refinance.

When you refinance, you get a new mortgage that will pay off the first loan. This leaves you with the obligation of just paying for the second loan (new mortgage) which can carry a lower interest rate, better payment terms, and lower monthly payments compared with the previous mortgage. You can consider refinancing especially when you have good credit.

Avoiding taking numbers at face value. Calculate the costs and differences between the existing mortgage and the new one to verify whether the terms of refinancing are indeed viable and more advantageous for you.

2. Request to extend the term of your loan.

There are trusted and reasonable mortgage lenders that allow this arrangement with borrowers. Instead of refinancing your mortgage, you can request to extend the payment term. This grants you more time to pay off the loan and also lowers the monthly payments you need to make. You also get to avoid property foreclosure.

Naturally, a 15-year mortgage will result in lower monthly payments as opposed to a 10-year mortgage. Bear in mind though that the interest payments will run higher the longer you delay in settling the principal amount. So do consider this option carefully.

3. Place a significant down payment.

You may put down a minimum of 20 per cent down payment. But, if you have the means to give more, why not go ahead and place a larger payment instead? Doing this will lower your monthly mortgage and save you a good deal on interest costs. If you are expecting a bonus or additional income at work, you can opt to delay in making a purchase. Pool more funds first so you can make a sizeable down payment later on for your property purchase.

Another good thing about giving more than 20 per cent on a down payment is that you wouldn’t need to pay for private mortgage insurance. This is a normal requirement when home equity hasn’t reached 20 per cent yet. Make the 20 per cent down payment so you get to enjoy significant savings.

4. Prioritize hitting a 20 per cent equity in your home.

Land values tend to increase over time. But don’t just wait for the value of your home to increase via assessment (or valuation). Consider personally prioritizing the down payment and initial mortgage payments early on. As mentioned earlier, the sooner you reach 20 per cent home equity on your purchase, the earlier you can get rid of your private mortgage insurance (PMI). It can be stressful on your finances when you have to manage both PMI and regular mortgage payments at the same time. So, get rid of the private mortgage insurance as soon as you can by repaying enough of the mortgage till you reach 20 per cent of home equity. Make an appraisal request from your lender when you’ve hit the target then request the PMI removal once you’ve confirmed it.

5.  Lower monthly payments by paying interests only.

Some lenders allow the arrangement of interest payments only during the early loan period. You may get an option to initially settle interest payments and not pay off the balance immediately. This interest-only loan is a good option for those who’ve made a large down payment and are in need of some time to get their finances in order. You may best consider this option as a temporary measure and endeavour to set a target date by which you will begin increasing your payments and start paying off the rest of your mortgage (the principal amount plus interest amount). Remember, the earlier you lower the mortgage’s principal amount, the more you get to save on interest costs.

6. Request a home property tax re-assessment.

Tax assessment rates how much your property is worth. (Note that this is different from appraisals. The county makes the assessment while private companies make the appraisals.) Property tax rates can greatly add to your mortgage obligations. So consider requesting for a repeat assessment especially if you are paying high taxes. It is good to have this checked because some homes can be overvalued. At times, land values decline due to rezoning or other issues. That’s why it’s good to check that the value of your land is up to date.

Explore filing a request to validate the worth of your property. You may be able to lower your property tax along with the mortgage payments (since lenders would normally collect the property taxes each month) should there be a need for some adjustments. Remember to file the assessment request with your respective county.

Note that with lowering land values, homeowner’s insurance would also go lower. This means lower mortgage payments and additional savings for you.

7. Make some money from unused space.

Your home can help pay for your mortgage when you rent out unused areas like an extra bedroom, spacious storage or even a basement. You can also put up an additional unit if your lot has a free section. Getting a tenant to rent provides you with additional and steady funds that can help cover your monthly mortgage payments.

8. Rent out your entire home, unit, or property.

You can purchase a property and rent it out initially. This option may literally allow the property to pay for itself and even pay for the place you’re currently renting in. Later, you may opt to move in when the mortgage is near or fully paid. Consider this option especially when you have money saved up and are looking for a solid investment. This is also a good option for singles or for small family units who can manage renting modest or smaller residences while they’re still renting out their purchased property to cover for the ongoing mortgage.

9. Settle the cost of Private Mortgage Insurance (PMI).

If your funds are sufficient, consider immediately settling the full cost of private mortgage insurance on your home. When you make a one-time payment, you no longer need to pay additional amounts on top of your mortgage every year. Consider this option to at least cover the full amount of mortgage insurance especially when you don’t plan to put up a 20 per cent down payment.

10. Request for a loan modification.

With loan modification programs, a borrower may be granted allowances on their current mortgage. Consider applying for one when you find yourself in a financial crisis. Lenders may grant a short term and even a long term reduction in interest rates, payment amounts, or an extension on term or dates as long as you meet the given eligibility requirements.

11. Increase your monthly mortgage payments.

Whenever extra funds come in, devote a good amount into making additional mortgage payments. Paying more than what is required every time you can means you get to finish off your mortgage obligations sooner. And when you do this frequently, you will lower interest costs significantly.

12. Discipline yourself towards making regular payments.

Do whatever you can to ensure that monthly payments are met. You may need to put the mortgage on top of the list, meaning, it’s where your income and bonus go to first. It’s the amount that you deduct and set aside first and foremost. When you settle your monthly mortgage payment, you spare yourself from having to pay additional interest costs, fines or late charges, and other costs.

In addition to these 12, there may be other options you can factor in to lower your monthly mortgage payment. As with any loan or financial obligation, you’ll want to come up with a strategy that will decrease both interest rates and the principal amount. You’ll also want to be able to close the mortgage at the shortest possible time. Always calculate costs before making your purchase. Or if you have an ongoing mortgage, sit down and find ways to repurpose your finances so you can avoid paying more than what you have to.

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