How to Lower Your Mortgage Payment in 10 Steps

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Contributor, Benzinga
March 28, 2024

A mortgage payment is (or will be) the largest monthly payment for most homeowners. In this age of high purchase prices and rising interest rates, planning ahead and considering every option for reducing mortgage payments now or in the future should be explored. Take a look at a few tips and tricks to consider when trying to lower your mortgage payments — they may be easier than you think.

10 Tips to Lower Your Mortgage Payment

Whether looking to purchase now or adjust your current mortgage payment, you have options. Take a look at these helpful tips to lower your mortgage payments.

1. Put At Least 20% Down

If looking to buy now, remember the size of your mortgage loan and monthly payment are directly affected by your down payment. The more money you can come up with initially, the lower your monthly payments will be for the next 30 years.

Putting at least 20% down and obtaining a conventional loan will prevent things like a monthly mortgage insurance premium (MIP) or private mortgage insurance (PMI). These are additional payments that can last years or sometimes the life of the loan.

2. Buy Down Your Interest Rate with Points

Having excellent credit will help you to qualify for a lower interest rate, resulting in a lower mortgage payment. But if you do not qualify for the lowest rate, consider buying down your rate with mortgage discount points. This is essentially prepaid interest that can roll into your closing costs. One mortgage point is 1% of the loan amount and can lower your interest rate by 0.25% to 5%.

Carefully consider this option, as the upfront cost can sometimes outweigh the long-term savings if you are not planning to stay at the location for too many years. It can be less expensive overall to pay a higher interest rate for a shorter amount of time in certain cases.

3. Negotiate With Your Mortgage Company

It may be worthwhile to negotiate with your mortgage loan lender to see whether it can adjust your mortgage terms to better fit your financial situation.

Before you begin negotiating with your lender, gather as much information about your mortgage as possible. This includes your loan term, interest rate and any fees or charges associated with your mortgage. It's also helpful to understand your current financial situation, including your income, expenses and credit score.

Remember that your lender wants to keep you as a customer and will be willing to work with you to find a solution that works for both of you. Be prepared to present your case for why you need a lower mortgage payment and any specific requests you have for adjustments to your loan terms. Perhaps you have a strong credit score or a history of making your payments on time. By staying informed and being persistent in your negotiations, you can successfully lower your mortgage payment and achieve greater financial stability as a homeowner.

4. Refinance Your Current Loan

If you locked in your loan at a higher interest rate than is currently offered, it may be worthwhile to refinance your mortgage. You may be able to accomplish this by contacting your lender to learn about refinance options and how to get a lower rate. This option can help save money on your monthly mortgage payments with a simple phone call.

Refinancing to an adjustable-rate mortgage can save you even more money over the short term, but you will need to refinance again before the mortgage balloons. Your average interest rate could be lower, and your initial interest payments will drop. If you get a different type of loan, you might also make cheaper mortgage principal payments over time.

To refinance, the lender will require you to complete a new loan application. If your financial situation has improved, your credit score has increased or the interest rates have dropped lower than yours, it’s worth a shot. Remember, the types of loans you can get might have changed. More competitive mortgage interest rates may be available, your new income ratio might qualify you for a cheaper loan or the mortgage servicer might charge fewer fees. These favorable changes to your loan will be locked in for the duration of the new agreement.

5. Remove Your Private Mortgage Insurance

If you are paying for PMI on a conventional loan, you didn’t put 20% down when you purchased. Now that some time has passed, you may be able to finally remove it. Here are some options:

  • Once your mortgage balance has reached 80% of the initial value of your home, you can request your lender to drop your PMI. A written request is all you need to start.
  • If you believe that you now have 20% equity in your home simply from home values in your market increasing, an appraisal can be done to prove your equity and you can request your PMI be removed.

It’s important to note that your PMI will automatically be removed once your mortgage balance has reached 78% of the initial value of your home. But if you keep an eye on your equity and balance, you can request PMI to be removed sooner. Good payment history and proof of value are important factors in requesting removal at 80%. This makes the cost of borrowing much cheaper.

6. Reevaluate Your Loan Terms

If you are looking to reduce your monthly mortgage payments and not necessarily pay your loan off sooner, reevaluating your loan terms can be an option. Even with keeping your same interest rate, you can opt for a new 30-year fixed loan to take over your current one.

Extending the life of your loan will help to spread out your monthly payments over a longer period, resulting in a lower monthly mortgage payment. It will take longer to pay off the loan but give you some breathing room in the meantime.

7. Budget and Allocate More Toward Your Home Loan

Paying extra toward your mortgage principal can lead to lower monthly payments over time. As your outstanding mortgage balance decreases, the interest payments you owe each month will also decrease. This, in turn, will lower the amount of your monthly mortgage payment. If you continue to make extra principal payments regularly, you might be able to shorten the life of your loan significantly. This means you'll be able to fully own your home faster than you would have without making extra payments.

To allocate more of your funds toward your home loan, you'll need to find ways to optimize your budget. This may include cutting back on unnecessary spending or finding ways to bring in more cash. It may be worthwhile to evaluate your current expenses or look into side hustles.

8. Reevaluate Your Homeowners Insurance Rate

Maybe it’s time to find a better deal on your homeowners insurance. You may decide to shop around for a new insurance company and compare your options. Sometimes, homeowners have had more success opting for a new insurance rate than negotiating with their current provider. This can vary on a case-by-case basis.

It's also worthwhile to check whether your current insurance offers discounts on things like:

  • Bundling home and auto insurance
  • Loyalty (if in good standing)
  • Age of the home (if newer)
  • Home improvements you’ve done — electrical, heating, plumbing or roof upgrades
  • Burglar and fire alarms
  • Get your property taxes reassessed (if you feel they will drop)
  • Seek a homestead exemption to reduce your property tax liability

Don’t be afraid to ask for the best deal or see whether you are eligible for discounts. You never know until you try.

9. Reevaluate Your Property Taxes

One strategy to lower your monthly payments is to appeal your taxes. If you believe your home is overvalued, you can have an appraisal done. Show the town the appraisal report along with comparable homes in the neighborhood that have sold at similar prices. If the town agrees that your home has been overvalued and the assessment should be lower, it can lower your property taxes. Lower taxes translate into a lower monthly mortgage payment.

10. Consider Government-Assistance Programs

Whether you have a high-interest rate or you're struggling to make ends meet, there are government programs that can help you lower your mortgage loan. These programs are designed to provide qualified homeowners with a more affordable monthly payment, making it easier to stay in your home and avoid foreclosure.

If you’re struggling to pay off your mortgage loan, consider looking into federal as well as state and local resources for mortgage assistance. You may want to consider applying to a government-sponsored program like the Home Affordable Modification Program (HAMP) or the National Council of State Housing Agencies (NCSHA). These initiatives are designed to help homeowners stay in their homes by providing options for affordable mortgage payments.

When Will Mortgage Rates Fall?

Interest rates and mortgage rates have slightly increased since the start of 2023. But as inflation continues to decelerate, there are some predictions that rates may start to decrease later in the year.

The 30-year fixed-rate mortgage hit 6.43% in the last week of April. According to Freddie Mac, despite an uptick, "the rate of inflation decelerating rates should gently decline over the course of 2023."

The trick is to keep an eye on them and lock in when you can. The fact is that these aren’t the highest rates ever seen. People still need to buy houses regardless of the interest rate, and homeowners still have options for lowering mortgage payments. Rates will continue to rise and fall and will most likely even out when inflation moderates, according to housing experts.

How to Keep Mortgage Payments Low

Purchasing a home during a period of higher interest rates can require a little extra effort if you want to keep your mortgage payments low. Making smart decisions and following a few simple steps can help you achieve your goal.

Use a Mortgage Calculator

One of the first steps you can take is to use a mortgage calculator to determine your purchasing power. By computing the price of homes you like online with the current interest rate, taxes and down payment, you can get an idea of what monthly mortgage payment to expect. This can help you narrow your choices and ensure you stay within your budget.

Get Prequalified

Another essential step is to get prequalified by a reputable mortgage lender. This will help you know exactly how much you can afford and prevent you from getting in over your head. Once you are prequalified, it's important to shop for homes in your price range and not look at homes you know you can't afford. Stretching your money is never a good idea when it comes to buying a home.

Buy in Your Price Range

It can be easy to get caught up in the excitement and overlook your budget. But stretching your finances to buy a home that is out of your price range is not a wise decision. It’s important to carefully consider the costs of owning a home, beyond just the monthly payment. This includes potential renovations and the ongoing monthly expenses of maintaining and running a household. By purchasing a home within your means, you can avoid added stress and financial strain.

Realize Your Needs Versus Your Wants

While it may be tempting to dream big and aim for a luxurious home, it’s important to distinguish between your housing needs and wants. A large, fancy home may seem desirable, but it may not be necessary for your family's needs. It’s important to identify the features that are important to you in a home, such as location, size and layout. Having a clear understanding of your priorities will help you make a more informed decision about which home to purchase. If you have your heart set on a more expensive property, consider refinancing down the line when your financial circumstances may be more favorable.

Shop Around for Insurance

Another factor to keep in mind when purchasing a home is insurance costs. It's important to shop around for the best rates and coverage when it comes to insurance policies. If possible, bundle your auto and home insurance for additional savings, and don’t be afraid to ask insurance providers about discounts. With a little bit of research and savvy decision-making, you can ensure that your home purchase is both a sound investment and a valuable asset for your family.

Comparing Mortgage Lenders

Reducing your mortgage payment is possible, and Benzinga is here to help. Benzinga offers insight and reviews on lenders that can help you make the best choice, whether you are about to make a home purchase or would like to explore options for your current loan.

Take Control of Your Mortgage Payments Today

Lowering your mortgage payment can be achieved through various strategies such as refinancing, extending the loan term, making extra payments, or even negotiating with your lender.

It is important to carefully consider your financial situation and goals before deciding on the best approach to lower your mortgage payment. By understanding your options and working with professionals in the industry, you can take steps to reduce your monthly expenses and achieve greater financial stability.

Remember, every individual's situation is unique, so it is essential to assess all possibilities and choose the strategy that aligns best with your long-term financial objectives.

Frequently Asked Questions


Is it worth paying extra toward my mortgage to lower the payment?


It depends on your financial situation and goals. Paying extra toward your mortgage can help you pay it off faster, but if you are struggling to make monthly payments, it may not be the best option.


How can I negotiate a lower mortgage payment?


Negotiating a lower mortgage payment can be done by making a phone call to your lender or reaching out to a new one. See what options are available based on your situation. Refinancing at a lower interest rate, extending the length of your loan, requesting to drop your PMI or shopping around for better homeowners insurance are all worth exploring.


Can I lower my mortgage payment without refinancing?


There are a few strategies you can use to lower your mortgage payment without refinancing, such as making extra payments to reduce your principal balance or negotiating with your lender for a lower interest rate.

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About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.