Owning a home is a great way to save money. Of course, the initial investment out of pocket might require a good chunk of change but generally speaking, your monthly payment will be lower on a mortgage and you’ll actually be paying into something. The problem with renting is that you are just throwing money at nothing. It isn’t building anything. But, every time you pay your monthly mortgage payment, you are chipping away at your home becoming entirely your own. However, there are fees and interest that you have to pay when owning a home that may up the cost somewhat. In order to get lower interest rates for home loans already in place, there are several things that you can do.
- Home Refinancing
This is the main way that people lower their home loans rates. Home refinancing is basically restructuring your loan or changing the terms. The main goal when you refinance a home is to lower your payment. The longer you wait to do this, the more likely you are to get approved. If it’s only been a couple of years since you bought the house, home refinancing may look a little suspicious and require a lot of paperwork and red tape to get through. You can extend your mortgage loan term in order to knock down the monthly payments or you can lock in your rate. However, keep in mind that there will be fees involved in home refinancing so make sure that you aren’t just breaking even between lower the interest and then paying the fees.
- Loan Modification
You have to be careful with loan mods because it does negatively impact your credit report. Only get this done if you have no other choice. If you have to get a loan modification make sure that you are actually reduces your interest rate rather than just extending your loan term because the latter won’t drop your interest rate. Getting a loan mod is only necessary or even available when you are experiencing some sort of financial hardship and are not able to make your regular payments. Talking with your lender might be able to give you some other options if you are going to temporary hardship but long term hard ship may require more drastic measures.
- Set up Auto Pay
One of the main reasons interests rates are so high is when your credit and financial history show that you may not be able to keep up with payments. If you set up automatic payment withdrawal with your lender, they may lower the interest somewhat. That will only happen if it’s possibly to lower your mortgage rate at all without having to refinance. However, keep in mind that if you close your account at the bank where you were receiving the reduced rate, your lender may raise your interest rate again.
- Lower Bank Fees
There are different types of home loans available and some come with a lot of fees. While simply negotiating the bank fees is not a home refinance or loan modification, it will still lower your monthly payment. If your concern more than lowering the interest rate is how to lower your overall payment, then this pay be a good place to start. Bank fees can get pretty high and if you can your bank to knock some of those down you may find that you can afford your interest rate. However, if you are specifically looking to lower your interest so that you can pay more towards the principal, then simply lower bank fees will not help that.
Lowering your interest can really only be done when you speak to your lender. This is something that you and your lender have to decide on. If you have been making on time payments and keep too your part of the contract, your lender will be a lot more willing to look into what can be done so that you can stop paying so much interest. There is only so much they can do but at least they will find out. But, if you have not been a very good homeowner as far as payments go, you will likely not be able to get much assistance.