3 Ways to Lower your Mortgage Payment 

Have you been considering refinancing your mortgage? Or trying to figure out how you can lower your monthly mortgage payment? With interest rates remaining historically low and home values on an uphill swing, a perfect combination has been created for homeowners to refinance. Let me tell you why now more than ever before may be the best time to refinance your existing mortgage. 

Lower Your Private Mortgage Insurance

First off, if you currently have a FHA mortgage loan, you are paying PMI every month. While PMI rates rarely change, it was last changed in 2015 when the Federal Housing Administration lowered the PMI rate to .85%. 

Simply put, if you received a new mortgage prior to 2015 and haven't refinanced since, you should refinance and lower the PMI you are paying just because the rate was reduced. At the time of the reduction, it was estimated to save homeowners on average $900/year. The amount of PMI you pay each month depends on your loan amount and the PMI rate you have. 

Eliminate Your PMI

If you bought your house during the last 5 years, you likely have enough equity to remove the PMI you pay all together. Since home prices are on the rise, a typical homeowner has gained anywhere from 15 percent to as much as 50 percent equity in their home over the last five years. If this fits you, then most likely you will have enough equity in your home to refinance into a conventional loan and remove the private mortgage interest payment for good.

Switch Commitments

Depending on your age, income, family, & lifestyle you may be in a different situation than you were when you first purchased your home. Perhaps you have gained 30 percent equity in your home and you'd like to set a goal to pay down the principle on your mortgage sooner than later. In this case, you could refinance your mortgage from a 30 year commitment to a 15 year commitment. Pay down your mortgage in half the time and own your home free and clear by the time you retire, if not sooner! 

In other cases, maybe you're in a 15 year mortgage but you are nearing retirement and the larger monthly mortgage payments don't fit your lifestyle any longer. In this case, you should refinance into a 30 year mortgage and you would greatly reduce the monthly mortgage payment into something much more affordable for you. 

Why Now is Better Than Ever Before

FHA borrowers pay the PMI for the entire length of the loan (this was put into policy in 2013.) If you had a new mortgage in 2013 or later and never refinanced, you would esentially be throwing money out the window after reaching more than 20 percent equity in your home by not refinancing into a conventional mortgage. 

Second, we have been hearing for the past 3 quarters that the Federal Reserve is likely to raise interest rates in December of this year. I'm already seeing interest rates slowly inching higher and higher. 

If you're not sure what to do or just have questions, please reach out to me. I've been in the mortgage business for more than 15 years. It never hurts to look into different scenarios with your mortgage broker to see which type of loan works best for your current situation. You can always reach me direct at (760) 574-8486 or you can email me here.