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
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?
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
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