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Lower Your Mortgage Payment Without Refinancing

A Unconventional Way To Lower Your Mortgage Payment

If you are looking for ways to lower your mortgage payment but you don’t want to refinance, here is a possible solution. Once you see all of parts that make up the whole of your monthly payment you will understand how this technique just might work in your situation to lower your mortgage payment.

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Challenge the Tax Assessment

Here’s an uncommon way to lower your monthly home payment: fight the tax assessment.

A conventional mortgage payment consists of your principal payment, your interest payment, and your “impounds,” which is a monthly payment that the lender puts towards your property taxes and homeowners insurance.

If you default on your property tax bill, the county can put a lien on your house. The governments lien will take priority over the lenders lien.

As a result, the lender collects your property taxes each month in order to protect its interest in your home. This payment sits in escrow until the yearly property tax bill is due.

Property tax is based on the county’s tax assessment of how much your home and land is worth.

Many of these assessments are too high, especially in the wake of the housing crash, which diminished home values. Sometimes assessments are also too high if the area has been re-zoned, the new zoning has caused home prices to decline, and the declined prices aren’t reflected in the assessment.

Homeowners can protest the assessment by filing a protest with the county or requesting a hearing with the state Board of Equalization. If the protest is approved, the homeowner’s taxes drop, which means that their monthly mortgage payment also drops.

(Note: an “assessment” is different from an “appraisal.” The county does an assessment for tax purposes. A private company does an appraisal, generally for loan and purchasing purposes.)
– via About.com Money

Ways To Lower Your Principle

These 3 ideas are simple ways to bring down the overall principle balance on your mortgage faster. Since you are paying interest on the entire balance over so many years, making small additional payments directly to the principle can make a huge impact on the number of years you will actually pay. Take a look at how.

Make 1 extra payment per year

During any time of the year, it’s your right to “prepay” your mortgage. You accomplish this making a second, separate payment to your lender in addition to your regularly-scheduled payment.

At today’s rates, making just one extra payment per year will reduce your loan’s length by approximately 4 years.

Multiply 4 years of payments by your monthly principal + interest due and you’ll get a sense for how much money making one extra payment per year can save you.

“Round up” your mortgage payment each month

Each month, when your mortgage payment is due, “round up” to the nearest hundred dollars. If your payment is $1,450, send your lender fifty dollars more.

When your payment is received, your lender will apply the extra monies paid to your principal balance, which reduces what you owe. This shortens your loan’s overall length and, again, saves you money.

Rounding up won’t have the same effect as making an extra payment annually, but you’ll put a sizable dent into your long-term costs.

Rounding up can shorten your loan term by two years or more, depending on your loan size and how many years remain in your term.

Enter a bi-weekly mortgage payment plan

Many lenders offer a bi-weekly mortgage payment plan through which you can make payments on your loan every other week instead of once per month.

There are 52 weeks in the year, which equates to 26 “half-payments” made which equates to 13 “full-payments” made, which makes bi-weekly programs similar to making one extra payment per year.
– via Mortgage Rates, Mortgage News and Strategy : The Mortgage Reports

Have you taken any action to lower your monthly mortgage payment or lower your principle balance?

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