Lowering Your Payment

Refinancing your home means taking on a new loan with different terms. To lower your monthly payment, you’ll need a loan that meets one or more of the following criteria:

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1. A Lower Interest Rate – The higher your interest rate, the more you’ll pay for your mortgage both now and in the future. A lower rate equals a lower payment if you don’t shorten the length of your mortgage term.
    

2. Gets Rid of Private Mortgage Insurance (PMI) – If you put less than 20% down on your original home loan, chances are you’re paying private mortgage insurance (PMI). If your home has increased in value and/or you have enough equity, you can refinance to eliminate this costly monthly payment.
    

3. Refinance to a Longer-Term Loan – When you refinance to a longer-term loan, you’re stretching the amount you owe over a longer period of time. While you might pay more in interest overall, your monthly payment will decrease.