How Can I Get A Lower Payment? - With home prices being so high, home owners throughout the country are allocating a bigger portion of their income towards house payments. In order to afford the suitable homes at these higher prices, an affordable mortgage is the only answer. For many, the quest for a mortgage with a lower monthly payment is as important as finding an affordable house. There are many different options available that can help you get a lower payment. Some of the options available that will typically help you reach a lower monthly payment are:

• Adjustable Rate Mortgage (ARM)
• Interest Only
• 40/45/50 Year Amortization
• Option ARM
• 2-1 Buydown

The pros and cons of each option will be discussed in more detail below.

If you already have a home and have a mortgage on your home you can refinance your home to obtain a lower monthly mortgage payment. When you refinance your home mortgage loan you can do a number of things. You can get cash out of the equity in your home, you can lower your interest rate, you can change your loan term (say from a 30 year term to a 15 year term to save a ton on mortgage interest), you can even increase your loan term (say from your 15 year term to a 30 year term to help save money each month on your payment), you can change your mortgage program from a fixed rate to an adjustable rate or an adjustable rate to a fixed rate, and you can accomplish many other things by refinancing. Consult a mortgage professional immediately before interest rates get too high.

By using an Option ARM loan product you will be able to take advantage of a lower monthly payment. Option ARM mortgages give the borrower four payment options every month. The four options are to make payments as if a 30-year mortgage (amortized for 30 years), or as if 15-year loan (15 years amortization), interest-only, or as minimum payment. Minimum payments are less than the interest accrued. The difference in the interests accrued and paid are added to the loan balance. If the home owner makes only interest payment every month, the amount owed gets higher rather than being paid down. The advantage to the deferred interest payment allows for very low payments. These loans are structured for payment flexibility and cash flow.

When purchasing a property an interest only loan may be a good option if you expect your income to increase in the future, your property is in a rapidly appreciating area or if you have considerable equity and don't plan on keeping the property past the interest only period.

Other options for lowering your payment might include refinancing into an interest only loan program. There are even lenders who will base your loan payments on a 40 or 50 year amortization length. These options will lower your payment if your interest rate stays the same

A 2-1 Buydown is a temporary discounted interest rate. A borrower gets a discounted interest rate that is the qualified interest rate less 2% in the first year of the mortgage term. In the second year, the effective interest rate is the qualified rate less 1%. From the third year on, the interest rate is the qualified rate. With a 2-1 Buydown the borrower enjoys a lower payment in the first two years because of the temporary lower rates.

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