Lower your monthly mortgage payment

When lowering your payment makes sense

Sometimes you need breathing room in your monthly budget. Maybe your expenses have changed, you're planning for a new baby, or you just want more flexibility. Lowering your mortgage payment can help.

There are two main ways to do this: getting a lower interest rate, or extending your loan term. Often people do both at once.

Lower rate vs. longer term

Lowering your rate reduces your payment without changing how long you'll be paying. If rates have dropped since you got your mortgage, this is the best option. You pay less each month AND pay less over the life of the loan.

Extending your term spreads your remaining balance over more years. This lowers your payment but means you'll pay more interest over time. It's a trade-off, but sometimes cash flow matters more than total cost.

Example: You have $250,000 left on a 20-year mortgage at 7%. Your payment is about $1,938/month.

• Refinance to 6% (keep 20 years): Payment drops to $1,791 (-$147/month)
• Refinance to 6% and extend to 30 years: Payment drops to $1,499 (-$439/month)

The 30-year option saves you more each month, but you'll pay about $90,000 more in total interest. Whether that's worth it depends on your situation.

When extending your term makes sense

Stretching your loan over more years isn't always a bad idea. Consider it if:

• Cash flow is tight now but will improve - Maybe you're in a career transition or have temporary expenses
• You'll invest the difference - If you can earn more than your mortgage rate, it might make sense
• You need the payment to qualify - Sometimes life changes and you need a lower DTI ratio
• You're not planning to stay long - If you'll sell in 5-7 years, total interest matters less

When to just lower your rate

Stick with a rate-and-term refinance (keeping the same payoff timeline) if:

• You can get at least 0.5-0.75% lower - Smaller drops might not justify closing costs
• You plan to stay long-term - The savings compound over time
• You want to build equity faster - Shorter terms mean more goes to principal
• You're already on track for your goals - If the current payment works, why extend?

What about recasting?

If you come into extra money (bonus, inheritance, etc.), some lenders let you "recast" your mortgage. You make a lump-sum payment toward principal, and they recalculate your monthly payment based on the lower balance.

Recasting is simpler than refinancing - no appraisal, no closing costs, usually just a small fee. But your rate stays the same, so it only makes sense if you have the cash and like your current rate.

Not all loans allow recasting, and there's usually a minimum lump sum required (often $5,000-$10,000). Ask your current servicer if it's an option.

The numbers to consider

Before refinancing to lower your payment, think about:

• Closing costs - Usually 2-5% of the loan amount. How long until monthly savings cover this?
• Total interest over the life of the loan - Extending your term increases this
• Your timeline - How long will you keep this mortgage?
• Opportunity cost - Could you use those closing costs better elsewhere?

We can run the numbers for your specific situation and help you decide if it makes sense.

Ready to explore your options?

Whether you want to lower your rate, extend your term, or both, we can help you understand what's possible. The right choice depends on your goals, timeline, and current loan terms.

Get a quote or schedule a call to talk through your options.