When mortgage rates increase, your monthly payments can balloon fast, especially if you buy a home, refinance, or have an adjustable-rate loan. But that doesn’t mean you’re stuck paying more.
The good news? There are smart ways to outmaneuver high interest rates and shrink your mortgage bill, even in today’s market. Whether you’re a first-time buyer or a longtime homeowner, these five secrets could lead to big savings over the life of your loan.
High-rate environments call for expert planning. If you have over $100,000 in investments, consider talking to a professional financial advisor. WiserAdvisor is a free service that will match you with a pro in your area.
1. Recast your mortgage instead of refinancing
If you’ve made extra payments toward your loan, your lender might offer a little-known option called a mortgage recast.
Unlike refinancing, recasting doesn’t require a new loan or credit check — you simply pay a lump sum toward your principal and your monthly payment is recalculated based on the lower balance.
It’s a smart way to lower your payment without losing your current interest rate.
Planning to make a lump-sum payment can be a good move. Be sure to make your regular savings work for you in the meantime. SoFi Checking is offering 3.8% interest, plus a potential $300 signup bonus. (May change without notice.)
2. Shop around for homeowner’s insurance
Your monthly mortgage payment includes more than just your loan — it also covers property taxes and homeowners insurance through escrow. If your insurance premium goes up, so does your payment.
You can request quotes from multiple providers or use an insurance marketplace to compare rates. Switching providers could knock something meaningful off your monthly bill.
Lowering your home insurance premium is one of the fastest ways to shrink your mortgage payment. Compare quotes from top providers today and make sure you’re not getting ripped off.
3. Appeal your property tax assessment
Many homeowners don’t realize they can appeal their property tax bill. If your home’s assessed value seems high compared to similar homes in your neighborhood, you might be overpaying.
Contact your local assessor’s office and ask about the appeals process. Lowering your property tax can lead to a lower escrow payment and a reduced total mortgage bill.
Already have equity in your home? Instead of taking on new debt, Hometap may let you unlock up to $600K with no monthly payments or personal liability.
4. Consider biweekly payments
Switching from monthly to biweekly payments means you make 26 half-payments a year, or 13 full payments instead of 12. That extra payment goes straight to your principal, helping you pay off your loan faster and reducing total interest.
Many lenders offer this option, which could shorten your loan term by several years.
Making small, regular payments is a smart way to save on your mortgage and your monthly bills. Paying more than $15 a month for your cell service? Click here to save a bundle.
5. Refinance strategically when the time is right
Refinancing isn’t ideal during rate spikes, but it could be worth revisiting if market conditions shift or your credit score improves. Even a small drop in your interest rate can lead to significant long-term savings.
Run the numbers carefully, and don’t forget to factor in closing costs. Refinancing might still be a strong move if you break even within a few years.
Considering a refinance? If you’ve got at least $100,000 in investments, work with a pro to see if it aligns with your financial goals. SmartAsset will connect you with vetted advisors in minutes.
Your mortgage doesn’t have to be a money trap
Interest rates may be rising, but that doesn’t mean your mortgage has to spiral out of control. By thinking strategically — whether through recasting, biweekly payments, or appealing taxes — you can take charge of your home loan and keep more money in your pocket.
Small moves now can lead to massive savings down the road.
If rising payments put pressure on your budget, you’re not alone. National Debt Relief is a trusted source for free advice and can help you regain financial control.