A high mortgage payment can really take a toll on monthly expenses. Here’s a list of our favorite ways to keep your payments low.

  • At the start of the loan, make a larger down payment: if you haven’t taken out the loan yet, this is your best option, so start saving! Even the traditional 20% down has a significant impact on future monthly costs.
  • Pay Private Mortgage Insurance (PMI) up front: if you put down less than 20% at the beginning of your loan, you will likely need to pay PMI along with your regular mortgage. Instead offer a one time payment, which cuts on monthly costs.
  • Stop paying Private Mortgage Insurance: Once you’ve come to a point where you’ve gained at least 20% equity in your home, an appraisal will confirm that you won’t need to pay PMI any more.
  • Extend the repayment term: also called re-casting or re-amoritizing, you can lengthen the time of the loan. For example, changing a 15 year mortgage to a 30 year mortgage, or a 30 year to a 40 year mortgage. Your lender may make the adjustments for a small one time fee.
  • Pay extra towards the principle: this may seem counterintuitive, but this is a smart idea for those who want to decrease payments later instead of right away. The more you pay towards the balance, the more you eat into your debt and pay less in interest.
  • Get an interest-only mortgage: surprisingly, lenders don’t need you to pay off your balance immediately. Some offer loans in two stages. In the first stage you only pay interest, and in the second, you pay the principal balance plus interest. Remember that you still need to pay off the balance of the loan in the time allotted.
  • Monetize your home: rent out the spare bedroom, or the garage, attic, or basement for storage. Offer up the extra space in your driveway for parking. Rent a section of the backyard for avid gardeners. Either way, this supplements your payments.