Can You Switch Mortgage Companies Without Refinancing
Lastly, you might be wondering if its possible to switch mortgage companies without applying for a refinance.
For example, if you really dislike the loan servicer youre currently assigned to, can you request a switch? The answer is essentially no because you dont get to choose your servicer.
Sure, you can pick the company that originates your home loan, but it will likely be transferred to a different company shortly after. And you wont have any say.
Most mortgage companies dont keep the loans they fund they transfer them to third-party servicers that collect your payments year after year.
So you should really only concern yourself with pricing and customer service during the loan process. After that itll be out of your control.
If you truly cant stand your servicer, a refinance would be one way to get a new one, but you could potentially wind up with the same company all over again once its transferred!
Find Savings Elsewhere In Your Home
You can lower your homeowner’s insurance by increasing the deductible, and take that savings and apply it to your mortgage principal. Increasing a $500 homeowner’s insurance deductible to $3,000 decreases the national average premium by almost 20 percent, for example.
Getting rid of private mortgage insurance, or PMI, is another way to pay off a mortgage quicker with savings found elsewhere. PMI is a monthly premium homeowners pay if they can’t afford at least 20 percent down on a home.
Once they have at least 20 percent equity, they can get rid of PMI. Under the Homeowners Protection Act, HPA, homeowners have the right to request cancellation of PMI when the mortgage is paid down to 80 percent of the original purchase price or appraised value of the home when the loan was obtained, whichever is less, says Tangela Walker-Craft, a writer for Examiner.com in Tampa, Fla.
Good payment history is also required, meaning not being more than 30 days late with a mortgage payment within a year of the request, or 60 days late within two years.
Another way to find extra money in your home is to convert part of it into an apartment to rent, or rent out your home on Airbnb when you’re away. Use the rental income to pay down the mortgage.
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Can I Lower My Mortgage Payment Without Refinancing
So, youre stuck with a high monthly mortgage payment. But youd rather not refinance and pay thousands in closing costs.
How can you lower your monthly mortgage payment without refinancing?
One option may be a mortgage recast.
Recasting lets you reduce your monthly bill, and usually only costs a few hundred dollars in lender fees.
The catch? Youll need a large cash sum you can put toward your mortgage right now to lower the balance. Heres how a mortgage recast works.
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Refinance To A Lower Interest Rate
The primary reason homeowners refinance is to lower their mortgage interest rate. This lowers your monthly mortgage payments but thats not all. It can also save you thousands over the full life of the loan.
For example, say you have a 30-year loan with a $200,000 balance at a 3.75% interest rate, explains Eileen Derks, head of mortgages at Laurel Road. If you refinance at a 2.75% interest rate, youll lower your monthly payment by $100 and save $39,500 in total interest payments over the life of the loan.
If youve had your existing mortgage for over two years or if your finances have improved since you bought your home theres a good chance you could qualify for a lower rate and substantial monthly savings.
How To Lower Your Monthly Mortgage Payment: Guide
If your mortgage payment is no longer affordable, you can refinance the loan, ask the lender for help, or check out your insurance options.
Edited byChris JenningsUpdated April 25, 2022
Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. By refinancing your mortgage, total finance charges may be higher over the life of the loan. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”
If you currently pay a mortgage, you might be looking for ways to save on your monthly bill.
A lower mortgage payment can put some breathing room in your budget and let you focus on other financial goals. There are plenty of options, including refinancing your mortgage, removing private mortgage insurance, applying for forbearance, and more.
Heres a rundown on how to lower your mortgage payment:
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When Should I Refinance My Mortgage
Refinancing is the process of taking out a new home loan and using it to pay off the balance on your existing mortgage. Ideally, this new loan will be more beneficial than the old one in some way. For example, you might refinance to secure a lower interest rate, adjust the term length on your original mortgage or switch the type of loan that you have.
One of the primary benefits of refinancing is the ability to reduce your interest rate. A lower interest rate may mean lower mortgage payments each month. Plus, saving on interest means you end up paying less for your house overall and build equity in your home at a quicker rate.
You might also refinance to adjust the terms of your loan, which may result in lower monthly payments. For example, if your existing mortgage has a term of 15 or 25 years, securing a 30-year mortgage could allow you to make smaller monthly payments over a longer period of time. Or, if you’ve already paid off a significant portion of your 30-year mortgage, taking out a new 30-year loan for the balance could offer similar monthly savings.
Just remember: a longer mortgage term may mean lower monthly payments, but it could also mean you’ll end up owing more in interest than you would with a shorter loan term. Be sure to consider whether your monthly savings are worth this increase in interest cost over time.
Ways To Lower Your Total Interest Cost Without Refinancing
At its best, mortgage refinancing saves you money in long-term interest charges while also creating lower monthly mortgage payments going forward.
But there are ways to save on long-term interest while keeping your existing home loan and its rate in place.
In fact, since amortization schedules front-load interest charges, you may save more by keeping your current loan anyway.
The methods below wont lower your payment today, but they can yield significant long-term savings by chipping away your loans principal balance.
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Can You Refinance Into A Shorter Term
If you have 20 years left on your mortgage and you refinance into a new 30-year mortgage, you may not save money over the long run .
However, if you can afford to refinance that 20-year mortgage into a 15-year mortgage, the combination of a lower interest rate and a shorter term will substantially reduce the total amount of interest youll pay before you own the house free and clear.
Negatively impacting your long-term net worth
Eliminating Private Mortgage Insurance
You are likely paying private mortgage insurance, otherwise known as PMI, if you used a conventional loan with under 20% down or if you used a low down payment loan at the time of purchase. Because property values are rising, however, private mortgage insurance likely wont last forever. This is because increasing property values reduce a homes loan-to-value, or LTV, ratio, potentially placing you in the position to cancel your PMI immediately.
If you do go down this route, you will first have to contact your lender and request to have your PMI removed, which your lender will either approve or deny. If your request is denied, you can either reduce your LTV to 78% with a lump sum payment, thereby cancelling your PMI add a value-enhancing feature to your home and have an appraisal or request a new home appraisal.
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Switch From An Fha To A Conventional Loan
FHA loans require a higher mortgage insurance premium payments as compared to conventional loans . Lets take a closer look at MIP. It has two components: an upfront premium and an annual premium. The current upfront premium rate is 1.75% of the loan amount. The current annual premium is 0.85% for the most common category of FHA loans. Though, annual premiums can be lower for lower LTV values or mortgage terms of fifteen years or less. Regardless, its not an uncommon financial strategy for borrowers to refinance from an FHA to a conventional loan once the 20% equity requirement is met just so they can avoid further mortgage insurance payments.
Remove Private Mortgage Insurance
You might also be able to lower your mortgage payment without refinancing. Eliminating private mortgage insurance , which protects the lender, can help lower your monthly payments.
You might be paying PMI if your down payment was less than 20% on a conventional loan, or have an FHA loan or USDA backed loan which both require PMI throughout the life of the loan. Either way, you might be able to ditch that PMI.
Heres how to get rid of PMI:
- Conventional loan: Contact your lender. PMI should automatically fall off once you have 22% equity in your home. But you might be able to ask your lender to remove PMI when youre scheduled to hit 80% LTV. This could happen earlier than anticipated if your home value has increased substantially.
- FHA or USDA loan: Youll need to refinance into a conventional loan, then ask your lender to drop PMI when you have 20% equity .
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Negotiating With Your Lender For A Lower Rate
To reduce your interest rate without refinancing, youâll need to negotiate with your current lender. With interest rates being at record lows right now, itâs likely that your lender is offering better interest rates to newer customers. Itâs a good idea to always check and compare your interest rate with the new rates your lender is offering. Donât forget to check what other lenders other lenders are offering!
If you see that your lender is offering lower interest rates, you could:
1. Call your lender up and ask for a lower rate
If you have demonstrated that you are a good, low-risk borrower, itâs likely that your lender will be happy to talk about reducing your interest rate if you ask. Be confident and assertive and request the lower rate that new customers are offered.
For lenders to seriously consider reducing your rate, you will need to prove yourself to be a reliable borrower with a good credit rating and history of making on-time repayments.
2. Speak to a Lendi expert who can do a rate review for you
Our experts can walk you through the rate reduction process by conducting a rate review for you. With our Same Lender Review service, they can compare your interest rate to the rates your lender is offering for new customers and assess how likely you are to be eligible for a lower rate.
Wondering if you can save on your home loan?
Find a better rate in 30 seconds with Lendi.
3. Ask a mortgage broker to negotiate on your behalf
How To Use A Refinance Calculator
There are many free refinance calculators readily available online which can help you determine if refinancing will save you money. With a refinance calculator, you can enter your current mortgage terms, the new proposed mortgage terms and any fees for refinancing. You can try this refinance calculator at LendingTree to see how it works.
A refinance calculator will help you figure out how much money youll save on a monthly basis and over the life of your loan, and whether its worth the costs of acquiring a new mortgage.
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Apply For Loan Modification
If you’ve experienced a severe financial hardship and your mortgage payment is no longer affordable, a loan modification may be an option. Thats when a lender restructures your loan in some way to lower the monthly payment.
You don’t have to be behind on mortgage payments to request a loan modification from your lender. In fact, if you’re facing an imminent reduction in income for example, from the loss of a job or retirement it’s a good idea to reach out to your lender about potential loan modification in advance.
Ways To Lower Your Monthly Mortgage Payment
Many homeowners refinance to lower their monthly mortgage payments. Generally, homeowners will want to refinance if the interest rate is lower than when you financed your home, or if you have an adjustable-rate mortgage that will soon have a higher interest rate than the current rate.
No matter what your reasoning, refinancing to lower your monthly mortgage payment will allow for extra income that can be put toward other things, like debts, expenses, investments, or even vacations.
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Pay Extra On Your Mortgage
Unlike a credit card, your mortgage probably has a set monthly payment of principal and interest. Paying more than the required amount one month does not mean you will have a lower payment amount the next. However, paying extra on your mortgage each month could help you pay off your mortgage faster and eliminate monthly mortgage payments sooner. For example, paying extra principal each month could help you pay off a 30-year mortgage in 27 years and save you from needing to make 36 monthly payments.
Why Mortgage Rates Matter
Your mortgage rate represents the cost of borrowing money to buy a home, and its expressed as a percentage of the loan amount. Mortgage rates have a major influence on a home loans affordability.
Heres an example: Lets say youre quoted a 5% interest rate on a 30-year mortgage for a $300,000 home and youre making a 20% down payment . The principal and interest portion of your monthly payment would be approximately $1,289.
If you take that same loan but increase the interest rate to 6%, your estimated principal and interest payment would jump to $1,439 a monthly difference of $150, and a more than $54,000 difference in interest over the life of the loan.
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Streamline Refinances Can Be A Lot Easier
Even if youre not eligible for these programs or able to negotiate a lower rate, it might be possible to execute a streamline refinance.
As the name implies, its a faster and easier way to refinance a home loan for the express purpose of securing a lower interest rate.
This option allows you to refinance without the typical requirements like a minimum credit score or maximum LTV, and with limited paperwork. You might be able to skip the appraisal too!
Even though its technically still a refinance, it should prove to be a lot easier to qualify, and it shouldnt be as painstaking of a process.
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Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our loans reporters and editors focus on the points consumers care about most the different types of lending options, the best rates, the best lenders, how to pay off debt and more so you can feel confident when investing your money.
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Ways To Lower Your Mortgage Rate
Buying a home is the largest purchase most people will make. And if you aren’t aware of the financing options available, it could wind up costing you far more than you’d expect.
Controlling your homeownership costs begins with your mortgage loan and the interest rate attached to that mortgage. The lower you can push your mortgage rate, the less money you’ll pay over the life of the loan.
Here are 10 ways to lower your mortgage rate.
How Much Are Pre
When you agree to a particular mortgage term, your are signing a contract for that amount of time, generally between 1 and 10 years. If you break your mortgage before that term is over, you’ll be charged a pre-payment penalty as a way to compensate the mortgage provider. How much this can cost varies wildly based on the type of mortgage you have, the time remaining on your term as well as your mortgage provider – each lender has a different way to calculate pre-payment penalties.
The exact pre-payment penalty calculation that applies to you will be laid out in your contract, but there are two methods used, outlined below.
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