I get this question often when I meet with clients to discuss their future financial situation. No matter what anyone tries to sell you, you can with out a doubt reduce your mortgage payment with out having to refinance your home mortgage loan.
There are a few things that you need to consider when thinking of lowering your mortgage payment. So Ill start with the easy stuff then make a run for the more difficult things needed.
Step one,
Does your loan have BORROWER paid mortgage insurance?
That’s right, You must check if you have borrower paid mortgage insurance. This is a pesky payment that goes to your lender and they pay your insurance provider. Don’t get this confused with your hazard insurance for your home. This particular insurance is for the lenders benefit. This insurance will cover you if you default. they will pay a certain amount of money to your lender to minimize their loss. So lets clear this up. Mortgage insurance is an insurance that you pay for but that benefits only the lender.
The mortgage insurance that you pay month to month will be the basis of your reduction. Keep this in mind when reading the rest of the steps.
Step Two,
12 MONTHS on time payments.
Although most lenders will automatically remove your mortgage insurance, this wont happen soon enough. They typically wait it out according to your amortization schedule. Now with that said most lenders have a manual removal tool they rarely use. If you have been on time with your mortgage for the first 12 months or more you will be allowed to seek a Private Mortgage Waiver. All you have to do is call in and speak to your lender’s mortgage insurance department and ask for the documents to be sent to you.
Step 3
Fee Paid
Okay I did not say this was going to be free! Yes you will most likely have to pay a fee for the waiver to be considered. However don’t pay this fee until you finish reading below.
Step 4
Value Check.
Now why do you have to do this? Its simple. The lender forced you to get mortgage insurance for one simple reason. You entered a mortgage with very little money down. So you have very little money to lose. That translates in to very easy for you to pick up and walk away from your home. So here is the rule of thumb. If you are wanting to be considered for a Mortgage Insurance Waiver make sure you have 78% ltv. Example if you own a home worth $100,000.00 and only owe $78,000.00 you are a great fit for the Waiver.
Here is what I would do for a good value check. I would call a local realtor, explain your intentions and offer to pay them for a CMA. This is a Current Market Analysis. This would give you a great idea of what your value is on your home as this would be a price that the realtor would list your home for on the market.
You can also reach out to an appraiser. They will give you a very close value to the CMA. Either way is good.
Step 5
Return Documents to lender
Fill out all documents leaving no blanks and send them back to the lender. Make sure you include a hand written letter telling them that you need to get the Mortgage insurance removed. Send in your CMA or Appraisal to back up your value.
Step 6
Hurry and Wait
Yes Yes Yes, You will wait and wait and wait. They will take no less then 30 days to get to your documents and send out their own value check method. Once the value is verified they the move on to instructing the internal departments to remove your MI.
So yes there is a way that you can reduce your mortgage payment with out having to refinance. It might not be easy or free, but it is worth every penny.
Try this out.
