How To Lower Your Monthly Mortgage Payment Even Without Refinancing

If you’re like me and dread making that monthly mortgage payment I know exactly how you feel.  It’s that one payment that comes and goes each and every month with no sign of going away anytime soon. So in this article I’m going to show you how to get a lower mortgage payment and on top of that I am also going to show how to lower your mortgage payment without refinancing.

Refinance To A Lower Rate

The first and most obvious option is to refinance your home mortgage to a lower rate.  In fact this is one option I’ve been looking into but since I’m buying a new how I’m going to hold off.

However if I were to do this I would be able to drop my rate from a 6% interest rate which is costing me around $550 a month to a 4.25% interest rate which would drop my payment to $408, saving me nearly a $150 a month in payments.

Buy Points


The next thing you could is to combine a refinance and buy points at the same time.  Points help lower your interest rate and can save you a ton of money overtime.

For example, if you have a $100,000 mortgage it would cost you 1% of the total loan amount to buy one point which would lower your loans interest rate by .125%.  So in the example above if you would buy 2 points it would cost you $2000 and you would drop your interest rate by a quarter of  percent.

What this means to you is if the rate on a 30 year fixed mortgage was 4.25% your rate would drop by 0.25% to 4.00% and lowering your payment as a result.  I should also mention buying points isn’t always a good idea especially if you don’t plan to live in the house long because you won’t get to see the full benefit from this in the long term.

Go With An Adjustable Rate Mortgage

The next option is to switch loan programs altogether and go with an adjustable rate mortgage.  Adjustable Rate Mortgages short for ARM allow you to get a lower fixed rate for a short period of time and once this specific time period is up the mortgage will be allowed to adjust once per year.

For example a 5/1 ARM will stay fixed for 5 years and after that period is up will adjust annually.  However if you currently have a $100,000 mortgage at 5% you would have a payment of $537, however if you would go with a 5/1 ARM your rate would fall to something around 3.75% which is today’s current rate and your payment would drop to $463, saving your around $74 a month.

Apply Extra Cash

The next option to consider on how to lower mortgage payment is to pay a portion of the principle down when you refinance.  For example, a $100,000 loan payment at 5% would be around $537 but if you would apply an extra $5000 to the principle  lowering it to $95,000 and getting a lower rate of 4.25% you would drop your payment to $467 saving you $70 a month.  Again, this option is very similar to buying points and if you don’t plan to live in the house for the long term you may not want to consider this idea.

Now in the first four options I’ve covered they all required that you to refinance your mortgage so in these last few options I’m going to show you a few different ways to get a lower mortgage payment without refinancing.

Cut Your PMI

The next option to consider when thinking about how to lower my mortgage payment  is to cut your private mortgage insurance also known as PMI.  PMI is a fee charged to your loan if you have less than 20% equity in your home.  For example if your home is worth $100,000 you would need the balance of the loan to be less than $80,000 to discontinue PMI.

However what happens a lot of times as you are paying down your mortgage lenders and banks won’t typically take PMI off of your loan right away.  Now over time they will cut it but if you want to speed up the process contact your lender once you are below the PMI threshold and they will cut this out of your mortgage payment.

Cut Your Escrow Account

The next thing you can do to get a lower payment mortgage is to cut out your escrow account. Your escrow account is used to pay your home owners insurance and real estate taxes however by cutting it you could lower your mortgage payment a ton.  In fact in my case my payment would drop by $100 or more.

Now you will still have to pay your real estate taxes and homeowners insurance separately, this won’t change.  However in my research I’ve found lenders to over charge for the money to process these payments.  In fact I added up all the taxes and home owners payments and found that I was paying my lender a few hundred dollars extra each year as a result.

I should also mention that most lenders will require you to have an escrow account if you don’t have at least a 20% loan to value, but if you can find a way to increase the equity in your home it could be worth while since it will help lower your payment.

Create A New Income

Finally, the last way on how to lower monthly mortgage payment is to create a new income.  This has been one of my favorite ways to pay my mortgage payment.  This can be done in so many different ways from getting a part time job to recycling aluminium cans, but my favorite way to do this is by starting an online business.

The online world is full of money making opportunities but one of the best ways to do this is by building a content based website.  This is a website that is built around a specific topic that earns money from advertising ads on the site.  The reason I like this opportunity so much is because it’s almost completely passive income.  Now I know this can seem a bit overwhelming for some people but if you could earn just enough money online to make your mortgage payments for your house what would that be worth to you?

In fact you may think it’s impossible to do, but my web properties have been making my mortgage payment for the last 2 years now.  If fact they have been paying for more than that recently and that can be very good feeling to have especially in an economy that may not be as forgiving.   To learn more about this idea check out my post on passive income opportunities.

Final Thoughts…

So, have you still been considering how can lower my monthly mortgage payment?  Look over the options I’ve presented and consider working a few of these ideas in to get a lower mortgage payment.  Also feel free to ask a question or if you know of a better way on how to lower your mortgage payment feel free to share it with everyone in the comments below.

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