How to Reduce a Mortgage
- 1). Consider a shortened loan term. If you qualify, refinance your home loan and switch from a 30-year term to a 15- or 20-year mortgage. Your payments will increase, but you'll reduce your mortgage balance quicker. Check refinance rates from at least two lenders to receive the best deal.
- 2). Increase payments. Use your disposable income wisely and add a few hundred dollars to your mortgage payment each month to reduce the balance more quickly.
- 3). Opt for bi-weekly payments. Reduce your mortgage term by a few years with twice-monthly payments. Make half-payments every two weeks, as opposed to one payment a month. Bi-weekly payments reduce the interest paid on the loan, which shortens the loan term.
- 4). Lower your rate. A lower interest rate can help reduce the payment on your existing home loan. Refinance the loan for a better rate or discuss loan modification (available to owners who endure financial hardships) with your mortgage lender. This program involves lenders modifying the original loan term and offering a lower rate to reduce payments and help borrowers keep their properties.
