Refinancing your mortgage can help you lower your monthly house payments or get a much-needed infusion of cash from the equity in your home. But swapping your existing home loan for a new one isn't always an option, especially with interest rates still historically high.
If your mortgage is overwhelming or you need money quickly, here are some ways to lower your payments without refinancing.
What you can do instead of refinancing
- Recast your mortgage
- Cancel mortgage insurance
- Request a loan modification
- Make biweekly payments
- Change your homeowners insurance
- Bottom line
Recast your mortgage
If your lender is willing, you might be able to recast your mortgage. That involves making a large lump-sum payment to lower the principal balance, after which your lender would re-amortize your loan. The terms would remain the same but the lower balance means your monthly payments would be lower and you'd end up paying less in interest overall
Cancel mortgage insurance
If you made a down payment of less than 20%, you probably had to take out private mortgage insurance, which protects your lender if you are unable to make payments. With a conventional mortgage, your lender will automatically cancel PMI when you reach 22% equity in your home. You might also be able to request cancellation once your equity is 20%.
Request mortgage forbearance or a loan modification
If you're facing financial hardship you can request forbearance — or a temporary pause in your mortgage payments — and get some time to get your money straight. You'll be responsible for the suspended payments when the forbearance ends, however.
Alternatively, you can ask for a loan modification, which permanently changes the terms of your loan. This option is usually used to avoid foreclosure.
Make biweekly mortgage payments
Splitting your mortgage into two biweekly payments might not seem to save you any money, but it help you pay off your mortgage years earlier, saving you thousands in interest.
Most borrowers make 12 mortgage payments a year. But, because a year has 52 weeks, you would be making 26 biweekly payments — or 13 full monthly payments — in the same time frame.
Adjust your homeowners insurance or property tax
When you closed on your home, you lender may have established an escrow account for you to deposit funds to cover your mortgage insurance, real estate taxes, homeowners insurance, and other fees.
Do some comparison shopping to see if you qualify for lower premiums on your house's policy. Nationwide is one of the best providers of low-cost homeowners insurance, with discounts available for bundling, installing safety features, updating your HVAC and more.
Nationwide Homeowners Insurance
Cost
The best way to estimate your costs is to request a quote
Maximum coverage
Not disclosed
App available
Yes
Policy highlights
Policy covers home and property damages caused by theft, fire and weather damage. It also covers personal liability, loss of use and unauthorized transactions on your credit card
Does not cover
Water damage, earthquakes, flood insurance, identity theft, high-value items, rebuilding home after loss (these can all be purchased as add-ons for extra coverage)
Terms apply.
Another inexpensive option is Erie Insurance, which has been highly rated for customer satisfaction byJ.D. Power. While it's only available in 12 states, Erie offers some of the lowest premiums of the companies we reviewed.
Erie Homeowners Insurance
Cost
The best way to estimate your costs is to request a quote
Maximum coverage
Not disclosed
App available
Yes
Policy highlights
Erie Insurance offers homeowner's insurance coverage in 12 states and offers some unique coverage features, including things like gift card reimbursem*nt, which covers gift cards for companies that have closed, as well as coverage for animals, birds and fish up to $500, and coverage for hard-to-replace items like accounts, bills, and passports.
Does not cover
Flooding and earthquakes, identity theft, high-value items (these can all be purchased as add-ons for extra coverage)
If you believe your property has been assessed at a higher value than it's worth, you may be able to request a review of your real estate taxes. (You'll need to provide documentation justifying another assessment.)
Lowering one or both of these payments means putting less into your escrow account every month.
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Bottom line
A mortgage refinance can be an excellent way to save money. But if the rates are too high — or you've been turned down — it might not be something you can take advantage of. Explore other ways to bring down your mortgage payment and see which makes the most sense for your situation.
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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage guide is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
