Over the past few years, interest rates have kept falling, reaching record lows. More than likely, you know people who have refinanced and now have much lower interest rates than you do on your mortgage. Refinancing is one way of lowering it, and it can be beneficial in most cases, especially when rates are this low. But you did your homework and came to the conclusion that refinancing will lower your monthly payment, but not enough to make up for the high closing costs. Another reason why you are not refinancing can be that you simply can’t afford it. Fortunately, there is another way in which you can lower your mortgage, without paying thousands in closing costs.
Most people are refinancing as soon as the rates fall, without taking the high closing cost and the fact that they are basically resetting their mortgage into consideration. For some, lowering their mortgage interest rate is the only way they can get some peace of mind, so current mortgage rates today seem very attractive. If you are someone who reached the conclusion that refinancing doesn’t make sense for you, but would still like to lower your mortgage rate, then you should know that there are alternatives.
Lowering Your Mortgage Rate without Refinancing
If you can’t afford to refinance because of the high closing costs, or you simply don’t want to refinance but can afford to make a larger monthly payment, then you can talk to your lender about lowering your interest rate by prepaying the mortgage principal. By making additional payments towards your principal each month, you can even save as much as you would by refinancing.
Restarting a mortgage through refinancing is time consuming and expensive, but if your monthly budget allows you to spend a little extra on your mortgage each month, then this is a great alternatives. Of course, this alternative will increase your monthly mortgage payments, but prepaying your mortgage will save you money in the long run.
Another way in which you could make paying your mortgage easier is by convincing your lender to give you a better rate. You can start by contacting your lender and explaining that you would like a better interest rate, but can’t afford to refinance, or simply choose not to because it wouldn’t make sense financially. If you have a good relationship with your lender, they might agree without giving you too much trouble.
Talk to your lender about your financial trouble, so that they can make sure that you deserve to have your loan modified. The lender could modify the loan, or he could help you go through the government’s Home Affordable Modification Program, which is designed to help home owners who are facing financial difficulties keep their homes.
In many cases, refinancing is the best choice when looking to reduce your mortgage payments. Unfortunately, being an expensive process with plenty of drawbacks, it is not for everyone. So, if you do the proper research and find out that refinancing is not an option for you, then you are better off trying to get a lower mortgage rate without refinancing, through one of the alternatives described in this article.