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Steps to a smaller mortgage payment

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If you’re like most American families, your mortgage payment is the largest bill you pay each month. Lowering this bill can save a family thousands’ of dollars a month. Fortunately, there are a couple ways to lower your mortgage payment without making major financial sacrifices.
1. To start, gather together any paperwork you have concerning your mortgage. This should include your original loan paperwork as well as your most recent statement. It is important to determine how much you owe, as well as the original amount you purchased the home for. You will also need to find out your interest rate and whether or not there are any payoff penalties on your mortgage.
2. While you are looking at your paperwork, take a few minutes to review your escrow account. Many people have one of these accounts that holds funds for insurance and property taxes. When taxes or insurance premiums go down, the bank will charge you less in escrow fees. Review your property tax statement and insurance policy and determine if any cuts need to be made.
3. Look up the prices for comparable homes in your area. In order to figure out whether or not your home will qualify for a new mortgage or a loan modification, you first have to determine if you owe more or less than the total value of your home. In today’s real estate market, it is estimated that at least one quarter of homes in America are underwater. This means that their owners owe more on their loan than the home could sell for.
If you are underwater on your home, it will be extremely difficult to qualify for a new mortgage. In order to qualify for a refinance, the bank has to believe that there is the potential to get their money back if they had to foreclose on the property. If the bank loans you more than the home is worth, it runs the risk of never getting this money back. Fortunately, there are several loan modification programs that are designed to help people in this situation.
4. If you are upside down on your mortgage, you will need to ask your bank for a loan modification. Unfortunately, there is a large backlog of requests for modifications, so expect the process to take a while. Also expect to have to send a lot of documentation. Many of these programs require proof of income as well as proof of financial hardship in order to qualify.
5. If you owe less than your house is worth, you can probably qualify for a new mortgage. In this case, the bank will have your home professionally appraised and an offer will be made based on the present value of your home and the market conditions. Treat this process exactly the same as getting your first mortgage. Expect the whole process to take several months. As you go through the process, pay close attention to the terms of the new mortgage. Be sure that you are getting a lower payment, since some new mortgages are written so that a borrower can pay off their loan earlier than they previously expected.

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