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Are you struggling to make your monthly mortgage payments? A report back in 2008 revealed that nearly one in 10 homeowners with a mortgage are behind on their payments.
There are a number of reasons why people may fall behind on their mortgage payments, including job loss, illness, or unexpected expenses. Whatever the reason, if you’re struggling to make your mortgage payments, it’s important to take action quickly to avoid falling behind on your loan and damaging your credit score.
Here are 10 tips to help you reduce your monthly mortgage payments:
- Get a lower interest rate. If you can qualify for a lower interest rate, you’ll save money on your monthly payments. You can do this by shopping around for a new mortgage or refinancing your existing loan. Having a good credit score will help you qualify for a lower interest rate.
- Make biweekly payments. Making biweekly payments instead of monthly payments can save you money on interest and shorten the term of your loan. When you make a biweekly payment, you’re making one extra payment each year. That can add up to significant savings over the life of your loan.
- Make extra payments. Whenever you have extra money, make an additional payment on your mortgage in Park City or wherever you are located. Even an extra $50 per month can make a big difference over the life of your loan. You can also make a lump sum payment once a year. This will reduce the interest you pay and shorten the term of your loan.
- Get rid of private mortgage insurance (PMI). If you have a conventional loan and put less than 20% down, you’re required to pay PMI. This is an insurance policy that protects the lender in case you default on your loan. Once you’ve built up enough equity in your home, you can cancel the PMI and save yourself some money each month.
- Refinance into a shorter-term loan. If you can afford it, refinancing into a 15-year mortgage will save you money on interest and help you pay off your home sooner. While your monthly payments will be higher, you’ll save money in the long run.
- Get rid of your second mortgage. If you have a second mortgage or home equity line of credit, consider paying it off. This will reduce your monthly payments and help you focus on paying off your first mortgage. You may be able to do this by refinancing into a first mortgage with a lower interest rate.
- Make your home more energy efficient. Making your home more energy efficient can save you money each month on your utility bills. You can do this by adding insulation, sealing drafty windows and doors, and upgrading to energy-efficient appliances. You may even qualify for a tax credit.
- Work with your lender. If you’re having trouble making your mortgage payments, don’t just ignore it. Contact your lender and explain your situation. They may be able to work with you to modify your loan or come up with a more affordable payment plan. You may also be able to temporarily suspend your payments or get a forbearance.
- Get help from a housing counselor. If you’re struggling to make your mortgage payments, there’s no shame in seeking help from a housing counselor. They can work with you to develop a budget and come up with a plan to get you back on track.
- Consider a short sale or deed-in-lieu of foreclosure. If you can’t afford your mortgage payments and are at risk of foreclosure, you may be able to do a short sale or deed-in-lieu of foreclosure. With a short sale, you sell your home for less than what you owe on your mortgage and use the proceeds to pay off your debt. With a deed-in-lieu of foreclosure, you deed your home back to the bank in exchange for being relieved of your mortgage debt. These options will damage your credit but may be better than going through foreclosure.
If you’re struggling to make your mortgage payments, there are options available to you. Contact your lender and explore all of your options. You may be able to modify your loan, get a forbearance, or even do a short sale or deed instead of foreclosure.
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