Wouldn’t you love to know how to reduce your monthly mortgage payments?
Here are 2 ways to reduce your monthly loan payments.
1. Lower Your Interest Rate by Paying Points
Lenders offer loans in different combinations. Most lenders often loans with different combinations of points and interest rates. If homebuyers are willing to pay points (expressed as a % of the mortgage amount) upfront, the interest rate is typically lowered by a few basis points. There are several calculators on this site that will allow homebuyers to determine which combination of points and interest rate will best suit them. It’s wiser to pay points, if you anticipate holding on to that loan for a long time. If that’s the case, the money paid upfront for the points is offset by the savings obtained by paying a lower interest rate.
24/7 Real Estate Loan Calculators
2. Lower Your Interest Rate by Refinancing
One of the most convenient ways to reduce monthly mortgage payments is to refinance your home loan. Refinancing is the process of paying off an existing loan balance by another loan with a lower interest rate. For example, if you have a loan balance of $250,000 on a loan with an interest rate of 6.0%, and if the interest rates drop to 5.0%, you can refinance your existing loan with a loan at 5.0%. By reducing your interest rate you will save $156 per month on your monthly mortgage payment (old payment of $1498 minus new payment of $1342).
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