9 Innovative Ways to Reduce Your Mortgage Payment

Your monthly housing cost as a condo owner is more than principal and interest. It also includes property taxes, insurance, mortgage insurance and HOA dues. That gives you more than one lever to pull. Here are nine ways to bring the monthly number down, whether you already own or you’re about to buy.

1. Refinance to a lower rate

If rates have fallen since you bought, refinancing can cut your payment significantly. Compare the savings against closing costs to see how long it takes to break even. Our post on what falling rates mean for the Downtown condo market covers the bigger picture.

2. Reset or extend your loan term

Refinancing into a new 30-year loan spreads what you owe over more years, which lowers the payment. You’ll pay more interest over time, so it’s best when you need monthly relief more than long-term savings.

3. Remove private mortgage insurance (PMI)

On a conventional loan, you can usually ask your lender to cancel PMI once you reach 20% equity, and it ends automatically at 22% based on the original value. If your condo has risen in value, a new appraisal may get you there sooner.

4. Recast your mortgage

If you come into a lump sum, many lenders will recast your loan: you pay down the principal and the lender recalculates a lower monthly payment, keeping your rate and term. Fees are usually small compared with refinancing.

5. Appeal your property taxes

If your condo’s market value has dropped below its assessed value, California lets you request a temporary reduction, often called a Proposition 8 review, from the San Diego County Assessor. That lowers the tax portion of your payment.

6. Shop your insurance

The HOA’s master policy covers the building, but you pay for your own HO-6 policy on the unit’s interior. Compare quotes every year or two, and make sure you aren’t paying for coverage the master policy already provides.

7. Review your escrow account

If your lender collects taxes and insurance through escrow, ask for an escrow analysis. If you’re overpaying, the lender can lower your monthly amount and refund the surplus.

8. Ask about a loan modification

If you’re facing financial hardship, talk to your lender early. A modification can lower the rate, extend the term or change the loan in other ways to make payments manageable.

9. Start lower when you buy

If you’re buying, you can build in a lower payment from day one: make a larger down payment, buy down your rate with points, or negotiate seller credits toward a rate buydown. Also compare HOA dues between buildings, which downtown range from under $500 to more than $2,000 a month. See our building guides to compare.

What won’t lower your monthly payment

Extra principal payments, biweekly payment plans and shorter loan terms all save interest and help you pay off your loan faster, but they don’t reduce the required monthly payment. A shorter term actually raises it.

Buying or refinancing in Downtown San Diego?

The Neuman Team has helped Downtown San Diego condo owners since 1981, with more than 7,400 closed sales, and has been #1 in 92101 for homes sold since 2000. See our mortgage options page or call (619) 595-7025.

Frequently Asked Questions

How can I lower my mortgage payment without refinancing?

Remove PMI once you have 20% equity, recast your loan with a lump-sum payment, appeal your property taxes if values have fallen, review your escrow account, and shop your HO-6 insurance.

Does paying extra on my mortgage lower my monthly payment?

Not by itself. Extra payments reduce your balance and total interest, but the required payment stays the same unless you ask your lender to recast the loan.

Can I lower my property taxes on a condo in San Diego?

If your condo’s market value falls below its assessed value, you can ask the San Diego County Assessor for a temporary reduction, known as a Proposition 8 review.