Navigating the waters of homeownership can be tricky, especially if it’s your first home. It can be especially draining if you dread your home payments each month. Having the majority of your income spent towards house payments can leave little room for the other essentials (and fun), which can leave you feeling stressed and stretched too thin.
Instead of constantly jumping through hoops each month, you should consider finding and utilizing ways to save money on your monthly home payments. Let’s get started:
Getting a Lower Payment
A great place to start saving money is by finding ways to lower the amount of your monthly payments. If you’ve taken a pay cut at work, acquired more debt, or had to reduce your working hours due to an injury, it’s understandable that your home payments are too high to maintain any sort of financial stability. Refinancing your home is an option that can seem intimidating at first but can be a valuable alternative to consider in order to lower your payments or shorten your mortgage term.
There are several ways you can lower your payments by refinancing; experts at Quicken Loans provide a few options worth considering:
- Refinance with a lower rate: “If rates now are lower than they were when you bought your home, it's worth talking to your lender to see what your interest rate could be. Getting a lower rate means lowering the interest portion of your monthly payment — and big interest savings in the long run.”
- Refinance to get rid of mortgage insurance: “Mortgage insurance is usually only required when you put down less than 20 percent. You could save hundreds of dollars a month by refinancing to stop paying monthly mortgage insurance.”
- Lower payments by changing your mortgage term: “Lengthening your term stretches out your payments over more years, which makes each payment smaller.”
Speaking with your lender is going to be one of the easiest ways to understand all of your options and in turn land on the best one for your situation. While the idea of lowering your payments can fill you with a sense of dread — refinancing can extend the period of payback on your loans — it’s important to keep in mind that lowering your payments (for the time being) is better than being unable to pay your monthly bills at all, which is bad news for your credit score and your stress levels. Adjusting your house payments to give yourself more control and stability is certainly worth speaking with your lender about.
Coins Under the Couch Cushions
Refinancing might not be an option for you and your home right now, but that doesn’t mean all is lost. As experts at Fiscal Tiger suggest, “sometimes, short of selling your home, there is nothing you can do to get help with your mortgage. When that happens, look to lower or eliminate other bills or debts that are draining your resources … maybe you can’t refinance your home, but you could refinance your car or student loans. If you have smaller debts, like for a cell phone or credit cards, dip into your savings to fully pay it off now rather than dragging it out.” Working to adjust all the various “small” costs can add up — in a good way.
It may not be the easiest or quickest route, but shaving off money where you can on other monthly bills will afford you more wiggle room throughout the year. FAFSA, for example, has a fairly simple process to adjust monthly student loan payments based on your income and other expenses, reducing how much you pay each month. It’d also be worth calling your credit card lender to see what payment plans they offer. You might end up paying more in the long run, but hopefully by then you’ll find yourself in a better place financially.
If you feel you've exhausted every option to no avail, there may be another option you haven't considered: mortgage grants and programs. These programs are set up to either help new homeowners with their down payments or provide general housing aid. Grants, which don’t have to be paid back, vary state to state so checking your local housing grants options might surprise you. It never hurts to look.
Sometimes, life can throw us a curveball. It can be tiring and frustrating trying to scrape together enough change for your house payment each month. While it might take some time and serious investigative work, talking with your lender, doing your research, and creating a new payment plan can lessen the strain on your finances and your mental health. It might seem impossible, but there are options out there for you and your home. Good luck!