Refinancing mortgage loans can ensure you have more money available each month to pay your other obligations. Many homeowners are now struggling to pay the costs of their current mortgage and require a path forward to minimize their monthly spending.
In this post, our team will provide a guide for reducing monthly mortgage costs.
Extend your repayment term
One option for refinancing a home mortgage loan is to extend your repayment term. Securing a new 30 year term can reduce your payment and provide increased cash flow. While the overall cost of credit would increase, your monthly payment can decrease if you refinance to a new 30 year loan. This is a good option to consider for those that are struggling to meet their monthly payments.
Discuss income and credit changes with your lender
Your lender may be able to help you with refinancing your mortgage by working with you on a new term options. Perhaps you’ve recently changed jobs and would like to pay more per month for a shorter term, or capitalize on your higher credit rating and pay less interest each month. Contact your lender to review your options and find out if you can consolidate your costs over the coming years.
Make additional payments toward the principal
Your principal mortgage amount can be reduced by making additional payments throughout the term. When you have additional income, you can choose to spend this income on your mortgage and reduce your interest costs over the life of loan. Reducing your balance through extra payments towards the principle will lower the cost of interest on your loan. As you work through the term your payments will decrease as the balance decreases. So, make sure you work with your lender on a plan to pay down the principal amount.
Rent out part of your home
One rarely considered option is to rent out part of your home for additional income. This option is ideal for those with a finished basement space they rarely use. You can rent out the basement as an additional bedroom in the home and use the rental income to pay down your mortgage. Many find this strategy gives them significant financial freedom as they build their savings.
To explore further options for reducing your monthly mortgage costs, contact our team today!