Paying too much for your mortgage in Texas?
A mortgage is a big financial commitment, and it’s important to make sure that you can afford the monthly payments. Home prices in Texas have reached an all-time high, and so have mortgage payments. The average monthly mortgage payment is now $2,547, and that is a 15% increase from August and almost 50% higher than in 2021 when the average payment was $1,698. Luckily, there are plenty of ways to lower your monthly mortgage payment in Texas. Let’s go through the main options that can help you save money on mortgage payments and get the most stress-free home-buying experience.
Refinance Your Loan With a Lower Rate
Refinancing a mortgage is one of the best ways to secure a lower interest rate. When you refinance, you replace your current mortgage with a new loan that has a lower interest rate. It can save you thousands of dollars over the full life of the loan.
For example, let’s say you have a $200,000 mortgage with an interest rate of 4.5%. Over the life of the loan, you’ll end up paying $164,000 in interest. But if you refinanced to a lower rate of 3.5%, you would only pay $142,000 in interest over the life of the loan – that’s a savings of $22,000. And the best part is, the savings start immediately.
Extend Your Loan Term
Many homebuyers choose a 15-year mortgage to pay off their loan faster and save on interest payments. However, a 15-year mortgage has a higher monthly payment compared to a 30-year one. If you are trying to lower your monthly mortgage payments, refinancing to a 30-year mortgage may be a good option.
Although the overall cost of the loan will be higher, the lower monthly payments can free up some much-needed cash flow. In addition, you have a chance to get more attractive rates that will save you money in the long run.
Remove Insurance Payments
If you have a conventional loan and made less than a 20% down payment when you purchased your home, you’re likely paying monthly mortgage insurance premiums (MIP). Mortgage insurance on conventional loans is paid for by the borrower as part of their monthly mortgage payment. However, there are ways to get rid of or reduce your MIP costs.
- Refinance into a different type of loan that doesn’t require MIP.
- Wait until you have built up enough equity in your home (usually 20%) and then request that your lender cancel your MIP.
If you took out an FHA loan, you’re also likely paying insurance, called private mortgage insurance (PMI). Unlike with a conventional loan, the PMI on an FHA loan is paid by the lender – not the borrower – and is usually included in the monthly mortgage payment. The good news is that once you’ve paid off enough of your loan and built up at least 22% equity in your home, you can request that your lender cancel your PMI. Until then, there are still options to help lower your monthly PMI costs.
- Make a larger down payment so that you start with more equity.
- Refinance into another type of loan such as a conventional loan (if you qualify) that doesn’t require PMI payments.
Switch To a Fixed-Rate Loan
An adjustable-rate mortgage is a home loan with an interest rate that can change over time. This means that your monthly mortgage payments can go up or down, depending on market conditions. While this type of loan can offer lower rates initially, it can also lead to much higher payments down the road if interest rates rise. For this reason, many homeowners choose to refinance their ARM into a fixed-rate mortgage.
With a fixed-rate loan, your interest rate will be locked in for the life of the loan giving you predictable monthly payments.
Review Your Property Taxes
If your home loan includes an escrow account, your monthly mortgage payment will include an amount to cover these taxes. In some cases, the amount can be significant. If you feel that your tax assessment is too high, you have the right to appeal the decision. The appeals process differs depending on the level of government that issued the assessment.
For example, appealing a local property tax assessment would typically involve contacting your municipality, while appealing a county assessment would require going through the county Board of Taxation. In either case, you will need to provide supporting documentation to back up your claim.
Work With a Reputable Mortgage Company
LBC Mortgage is a reputable mortgage broker in Texas that has been helping homebuyers get the financing they need for over 20 years. We work with a variety of lenders to find the best loan options for our clients, and we are committed to getting the most competitive interest rates and fees. Our team has a wide range of experience, including working with first-time homebuyers, self-employed borrowers, and those with less-than-perfect credit. We understand the unique challenges that Texas homebuyers face, and we are here to help you navigate the mortgage process.
If you’re looking for effective ways to lower your mortgage payments in Texas, contact LBC Mortgage. We understand that mortgage payment is one of the largest monthly expenses, and we always try to help our clients reduce their payments.
Contact us to learn more about our services and how we can help you get the home of your dreams.