How To Lower Your Mortgage Payment Without Refinancing

Try these strategies to decrease your monthly home loan bill

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Many homeowners would appreciate having a lower mortgage payment. Although refinancing is the most popular way to lower your mortgage payment, it’s not always the ideal option. The good news is that a few other strategies can help you reduce that regular bill without having to refinance into a whole new loan, including mortgage recasting, eliminating private mortgage insurance (PMI), and finding ways to reduce your property taxes and insurance.

Learning more about how to lower a mortgage payment without refinancing can help you choose the best strategy for your situation.

Key Takeaways

  • Mortgage refinancing is not always the best solution for homeowners who are trying to reduce their mortgage payments.
  • If you can reduce any of the line items included in your payment, you can pay less overall each month.
  • Mortgage recasting can reduce your monthly payments, but you’ll need a lump sum of cash.
  • Removing PMI, appealing your property tax assessment, and shopping around for better home insurance rates are other ways to potentially reduce your mortgage payment.

When You Might Not Want To Refinance

Although refinancing is one of the most common ways to significantly lower your mortgage payment, it’s not always the right solution. For example, refinancing might not be a good idea if:

  • You don’t think you’ll meet the qualifications. Refinancing involves a thorough loan-application process, and borrowers must meet stringent credit and income standards.
  • You already have an acceptable interest rate. If you can’t lower your rate enough to offset the closing costs and still benefit from a lower payment, refinancing probably isn’t the best route.
  • You plan to move in the near future. Because closing costs can be significant, make sure you’ll remain in the home at least long enough to recoup that amount.

If you’re having trouble making your mortgage payments, don’t hesitate to reach out to your lender to discuss your options. Many lenders have hardship programs that will provide relief on a temporary basis. You may even qualify for loan modification, which could reduce your monthly payment.

Ways To Lower Your Mortgage Payment Without Refinancing

If refinancing is not in the cards for you, there are other ways to lower your monthly mortgage payments. Most mortgage bills are comprised of PITI (principal, interest, taxes, and insurance), so reducing any of those elements can reduce your payments.

Recast Your Mortgage

Mortgage recasting could be an option for you if you have access to a lump sum of cash you can put toward your mortgage. If your lender allows it, you’ll agree to make a large upfront payment (plus a recasting fee, which is usually a few hundred dollars). The lender will recalculate the remainder of your payment schedule, typically over the same term. Because you’ll now have a lower principal, your monthly bill should go down.

“​​Typically, the mortgage recast is well worth the cost, especially if the lump sum is significant,” said Cliff Auerswald, president of All Reverse Mortgage, Inc., in an email to The Balance.

On the positive side, you don’t have to worry about meeting loan qualifications as you would with a refinance, and you won’t restart the clock on a new 30-year mortgage. However, make sure you’re not depleting your cash reserves or emergency fund to make the lump-sum payment. If you’re considering a mortgage recast, it may be worth having a conversation with your financial advisor to see if it’s the right move for you.

 “If you’ve inherited a significant amount of cash or saved up for some time, consider the cost benefits of the mortgage recasting versus other investment options,” said Auerswald. However, if you’ve been struggling to make your monthly mortgage payments, he said a recast might make the most sense.

If you have a government-backed loan such as an FHA, VA, or USDA loan, you can’t recast your mortgage. You can only recast conventional loans.

Eliminate Your PMI

Private mortgage insurance (PMI) is part of your mortgage payment if you originally put down less than 20% on your home. Your contract includes the date on which your servicer must automatically terminate PMI, which is when your principal balance reaches 78% of the original value of your home. You can also request that your lender remove PMI if your principal has reached 80% of the original price of your home.

However, you might reach that 80% threshold sooner than you expect if your home increases in value—as long as you can prove it with an appraisal. “If you’re paying mortgage insurance and have lived in your home since 2019, you're probably eligible to have your PMI removed,” said Dan Green, CEO of Homebuyer.com, via email. Green explained that home values have increased so much in the last couple of years, most homeowners will likely have amassed enough equity to drop the PMI requirement.

Contact your lender to find out about the process to request PMI cancellation. If you’re successful, you will knock down your monthly mortgage payment by whatever amount you were paying.

Shop Around for Cheaper Homeowners Insurance

It’s smart to periodically look for better deals on homeowners insurance. You can call around to get quotes from a few insurers, and if it’s worthwhile, you can make the switch. Just be sure you’re reviewing quotes for comparable, adequate home insurance coverage.

Even if you want to stay with your current home insurance carrier, you may be able to reduce your bill. For example, most insurance providers offer discounts for bundling two or more of your policies, said Green. For example, consider switching your car insurance to the same company that provides your home insurance.

Another option to consider is raising your deductible. For example, moving from a $500 to $1,000 deductible could reduce your premium.

Appeal Your Property Taxes

Property taxes typically fluctuate each year based on your home value assessment, and if they increase, so will your mortgage payment. However, if your home isn’t assessed correctly, you’ll pay a higher property tax bill than you otherwise would.

Bill Samuel, a full-time residential real estate developer who specializes in rehabbing, renting, and selling houses in the Chicago area, told The Balance in an email that homeowners have the option to appeal their property taxes through their local assessor's office. “The rules and specifics of real estate taxes will vary by location,” Samuel noted, but you may be able to have them reduced.

Start by reviewing all the information the assessor has on file for your property to check for any discrepancies. If you find any inaccurate information that might suggest the estimated value provided by the assessor is overstated (for example, your house is listed with four bedrooms but you only have three), you could have a strong case for appealing your property taxes.

Samuel also recommended consulting with a local tax-appeal professional to help you evaluate the valuation and see if there is potential to reduce it.

The Bottom Line

Lowering your mortgage payment without refinancing can provide some breathing room in your budget. By reducing any of the components that go into your mortgage payment, including the principal, mortgage insurance, property tax, and home insurance, you can reduce your bill without the hassle of a full refinance.

Frequently Asked Questions (FAQs)

How much does a down payment lower a mortgage payment?

Your down payment has a direct impact on your loan terms and the amount you will pay each month. For starters, if you can’t put 20% or more down, you will have to pay private mortgage insurance (PMI). Ultimately, the more you put down, the smaller your principal loan amount, and therefore, the lower your payments. For example, using a mortgage calculator, if you put down $60,000 on a $300,000 home, at 4% interest, your monthly principal and interest payment would be $1145.80. But if you put down $80,000, the monthly payment would be $1050.31. You don’t necessarily want to use all of your cash toward a down payment; keep some reserves available for repairs, improvements, and emergencies.

Can I change my mortgage payment due date?

Your mortgage payment due date will be set when you close on your home. Lenders’ policies vary regarding your ability to change your due date, but you can always ask. Keep in mind that most loans will have a grace period, meaning you have an additional number of days to make your payment before you’ll be charged a late fee. Some loans may also allow borrowers to choose biweekly payments.

Why did my mortgage payment go up?

Because many home loans require that taxes and insurance costs be lumped into your mortgage mortgage payment, your payment amount will go up if your property taxes or home insurance premiums increase. Even if you have a fixed-rate loan, property taxes and insurance premiums are not fixed amounts. Therefore, you can expect to pay a slightly different amount each year.

Article Sources

  1. Experian. “How To Recast Your Mortgage.”

  2. Consumer Financial Protection Bureau. “When Can I Remove Private Mortgage Insurance (PMI) From My Loan?,” see “Automatic PMI Termination.”