Refinancing is the most popular when it comes to reducing your mortgage rate but refinancing isn’t always the best route for homeowners to cut down their monthly payments. In this article, you will learn some ways how to reduce your mortgage rate.
Ways To Reduce Mortgage Rate Without Refinancing – Here’s How! (PHOTO: AllAboutCareers)
Reducing Mortage Rate
When mortgage rates drop, homeowners usually wonder if they will be able to take benefit from lower interest rates. In general, lenders require borrowers to refinance into a new home loan to change their mortgage rate, demanding the borrower to requalify for a new mortgage, the house to pass an appraisal, and the homeowner to again settle closing costs. However, there can be other avenues to explore if you don’t want to refinance but want to trade your higher interest rate for a lower rate without refinancing it.
Here Are Ways To Reduce Mortage Rate Without Refinancing
Here are some alternative strategies you can utilize to save money and reduce your mortgage rate without refinancing.
- Recast Your Mortgage
Recasting your mortgage is a fantastic option to lower payments but it will only be helpful to those who can afford extra or lump-sum payments.
- Request a Loan Modification
Some mortgage lenders will make concessions for borrowers who are struggling financially or falling behind on payments by temporarily or permanently modifying their home loan or granting mortgage forbearance.
- Cancel Your Mortgage Insurance
Private mortgage insurance (PMI) is generally needed by lenders for a conventional loan if you put less than 20% down on the purchase of your home, per The Mortgage Reports. However, once you’ve established 20% equity in your house, you can request that your lender remove the insurance from your loan, saving you the typical 0.2%-2.0% PMI on the loan annually.
- Rethink Your Payment Patterns
If the reduction techniques above don’t pan out and you can afford them, you can try to save money in the long run by moving your payment habits. This won’t reduce your rate or monthly payments but will help you to save later by chipping away at the overall loan balance.
- Simply Ask for a Lower Rate
The most unconventional ways in reducing your mortgage rate might be the most straightforward. Lenders are like credit card companies they want your business and will haggle to keep it when you have interest rate concerns. Although it may be more effortless if your original loaner also collects your payments and if your current rate is substantially higher than market comparables, you may get lucky by just calling your mortgage lender to arrange a lower rate without the inconvenience of refinancing.
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