how to lower a mortgage without a refinance

5 WAYS TO LOWER YOUR MORTGAGE WITHOUT A REFINANCE

Question: What are the ways to lower a mortgage without a refinance?

  • Recast or Reamortization
  • Request to remove PMI
  • Ask to recalculate your escrow
  • Review your Homeowners Insurance again

 

When you refinance in most cases you add years to your mortgage and you pay fees in thousands and at closing you probably pay 1% of the loan amount as the origination fee.

Before you consider a refinance or if you tried and didn’t qualify…here are some other options to try first

🏘️RECAST OR REAMORTIZATION

No mortgage lender will advertise this as an option to you because they don’t make much money

With low interest rates right now the money is in the refinance for them

But a Recast or Reamortization is an option that may be available to you

It allows you to lower your monthly payment and pay less interest over the life of the loan

How does a Recast work?

You offer to pay a minimum payment usually starting at $5,000

The remaining balance is then amortized or “Recast” the monthly payments

There is a fee for a Recast but it is minimal compared to a refinance and can be as low as $150

A Recast is not available from all lenders so you need to call and ask your lender if they offer a Recast

💡Tip: A recast does not shorten the length of your mortgage but it also does not extend the length like a refinance

 

Benefit of a Recast?

New principal balance is recalculated

Reduced principal balance equals lower interest

🏘️ASK TO REMOVE PMI

If you have less than 20% equity in your home or didn’t make at least a 20% down payment on your home purchase, you are paying PMI or private mortgage insurance

To meet the 20% equity threshold for your lender to consider removing PMI there are few things you can do

Get a new appraisal on your home if you believe the value of your home has increased

Did you increase the value of your home?

Added a room?

Did a kitchen remodel?

A new swimming pool?

Did the home values in your neighborhood increase?

Your home is now worth more than when you purchased it

Use the Loan to Value Formula to see if you can remove PMI

Divide the loan balance (amount you owe now) by the original appraised value (purchase price?)

ex) You owe $175,000 on a house that cost you $220,000 

$175,000/$220,000=.79

79% so you are under 80% it is time to request to cancel PMI

🏘️ASK YOUR LENDER TO RECALCULATE YOUR ESCROW

You can call your lender and ask for an escrow analysis

When to ask for this?

Property taxes have decreased

Home Insurance rates have gone down

You no longer have Flood insurance escrowed because you are now in a preferred flood zone X


💡Lower rates on Home insurance is the fastest way to lower your mortgage payment at no cost to you


The two best times to review your Home Insurance?

Escrow analysis

Home Insurance renewal

With over 25 home insurance companies writing new policies in South Louisiana now is the time to get a lower rate

Credit and Non Credit Home Insurance rates are available

🏘️Reasons to get a new home insurance quote?

You have been with the same company over 3 years

When you purchased your home the lender or real estate agent recommended you to their insurance referral partner

You have not reviewed your home insurance since you purchased your policy 

💰💰BONUS💰💰

When your home insurance is escrowed and you find a lower rate on home insurance

Your lender will perform a new escrow analysis based on the lower annual home insurance rate which will result in a lower monthly payment

You get a refund in the mail when you cancel your home insurance policy before the expiration date

💔WE HELP YOU BREAK UP WITH YOUR CURRENT INSURANCE COMPANY💔

Breaking up is hard to do

It can be awkward that is why we do all the work for you

We obtain the necessary paperwork so we can get you a refund sent directly to YOU not your mortgage company

We make it easy for you

When you do I will review your insurance protection and let you know if we can help you within minutes

Talk to you soon 

Agent Tim 504.348.3131

FM Agency Group has been helping homeowners since 2001 with their home insurance protection