How to Lower Your Mortgage Payment Without Refinancing
The short version
If you have a low rate from the last few years, refinancing today would likely raise your payment, not lower it. You can still bring your monthly payment down without a new loan. The six options below are ranked from biggest typical savings to smallest:
- Recast your mortgage with a lump sum (lower payment, same rate)
- Remove private mortgage insurance if you have it
- Shop your homeowners insurance
- Appeal your property tax assessment
- Pay down an adjustable-rate loan before it resets
- Ask your lender about a loan modification if you’re facing hardship
Why refinancing stopped working
Refinancing means replacing your loan with a new one at today’s rate. That only lowers your payment if today’s rate is lower than yours.
Today’s rates are well above the record lows of 2020 and 2021. You can see the current Freddie Mac average in the reference rate at the top of the mortgage recast calculator. Most homeowners who bought or refinanced between 2020 and 2022 have rates far below current levels. For them, refinancing would mean trading a cheap loan for an expensive one.
Here’s what that looks like with real numbers. Say you owe $350,000 at 3.5%, with 25 years left. Your principal and interest payment is about $1,752 a month. Refinance that same balance into a new 30-year loan at 7.28% (an example rate), and the payment jumps to about $2,395. That’s roughly $640 more every month, plus closing costs.
So the question becomes: how do you lower the payment while keeping the rate you have?
1. Recast your mortgage
A recast (also called re-amortization) works like this: you pay a lump sum toward your loan balance, and your lender recalculates your monthly payment based on the smaller balance. Your interest rate and your payoff date stay the same. Only the payment drops.
Using the same example: you owe $350,000 at 3.5% with 25 years left, paying $1,752 a month. You put $50,000 toward the balance and ask for a recast. Your new balance is $300,000, and your payment falls to about $1,502. That’s about $250 less every month, and you keep your 3.5% rate.
What it costs: lenders typically charge a one-time fee of about $150 to $500. Many also require a minimum lump sum, often $5,000 or more.
Who qualifies: most conventional loans can be recast. Loans backed by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA) generally can’t.
The catch: you need cash on hand. Recasting makes the most sense when you have money sitting in savings that would otherwise earn less than your mortgage costs you, such as an inheritance, a bonus, or proceeds from selling another property.
Run your own numbers with the mortgage recast calculator, and see what lenders charge to recast.
2. Remove private mortgage insurance
If you put down less than 20% when you bought your home, you probably pay private mortgage insurance (PMI). It protects the lender, not you, and it can be a big part of your payment. At 0.75% a year, for example, PMI on a $300,000 loan costs about $188 a month.
Under federal law, you can ask your lender to cancel PMI once your balance reaches 80% of your home’s original value, as long as your payments are current. It ends automatically at 78%. Some lenders will also remove it based on your home’s current value if prices in your area have risen, though that usually requires a new appraisal.
Find out when you qualify with the PMI removal calculator.
3. Shop your homeowners insurance
If your lender collects for taxes and insurance through an escrow account (money added to your monthly payment to cover those bills), then a cheaper insurance policy means a lower monthly payment.
This matters more than ever. Insurance premiums have climbed sharply in recent years, and many homeowners have been hit with escrow shortages: their lender didn’t collect enough the year before, so the payment jumps to catch up (see how an escrow shortage works). Get quotes from at least three insurers. Ask about raising your deductible and about discounts for bundling, new roofs, or security systems.
If you switch to a cheaper policy, send the new policy to your loan servicer (the company you make payments to) and ask whether they’ll run a new escrow analysis. That’s what actually lowers your monthly payment; without it, the savings may not show up until your next annual review.
For more on how escrow works, see how to add escrow to your mortgage.
4. Appeal your property tax assessment
Your property tax bill is based on what your county thinks your home is worth. If that estimate is too high, you can appeal it.
Check your assessment notice for errors, like the wrong square footage or an extra bathroom you don’t have. Compare your assessed value with recent sales of similar homes nearby. Most counties have a deadline each year for appeals, so check your county assessor’s website.
Also make sure you’ve claimed every exemption you qualify for. Many states offer a homestead exemption that lowers taxes on your primary home, plus extra exemptions for seniors, veterans, and people with disabilities. These aren’t always applied automatically.
As with insurance, a lower tax bill lowers your monthly payment through escrow. Ask your servicer to update your escrow once the new bill is set.
5. Pay down an adjustable-rate mortgage before it resets
If you have an adjustable-rate mortgage (ARM), your rate is fixed for the first few years, then changes based on market rates. Many ARMs taken out in 2020 and 2021 are reaching that point now, and at today’s rates the new payment can be hundreds of dollars higher.
When an ARM resets, your new payment is usually calculated on your remaining balance. So paying down principal before the reset date makes the new, higher rate apply to a smaller balance. Check your loan documents for the reset date and your rate caps (the limits on how much your rate can rise at once and over the life of the loan).
See what your reset could look like with the ARM reset calculator.
6. Ask about a loan modification if you’re struggling
If you can’t afford your payment because of job loss, illness, divorce, or another hardship, contact your loan servicer before you miss a payment. A loan modification permanently changes your loan terms, for example by extending the term or lowering the rate, to make the payment affordable.
Modifications are for real hardship, and they can affect your credit. A housing counselor approved by the Department of Housing and Urban Development (HUD) can help you understand your options for free. Be wary of companies that charge upfront fees to “lower your mortgage”; legitimate help from your servicer and HUD-approved counselors doesn’t cost anything.
When refinancing still makes sense
Refinancing isn’t always wrong. It can still pay off if your current rate is higher than today’s. Freddie Mac’s average 30-year rate peaked at 7.79% in October 2023, so some people who bought in late 2023 or 2024 have rates close to or above current levels.
Before refinancing, compare the monthly savings with the closing costs, which usually run 2% to 5% of the loan amount. If it would take you longer to recover those costs than you plan to stay in the home, refinancing doesn’t pay.
For a side-by-side comparison, see mortgage recast vs. refinance.
Frequently asked questions
What is the fastest way to lower my mortgage payment without refinancing? Shopping your homeowners insurance is usually fastest, since you can switch policies in days and ask your servicer to update your escrow. A recast takes longer, typically a few weeks to a couple of months, but it can lower your payment much more if you have a lump sum available.
Does a recast lower my interest rate? No. A recast keeps your interest rate and your payoff date the same. It only lowers your monthly payment by reducing the balance the payment is based on.
Can I recast an FHA or VA loan? Generally, no. Loans backed by the Federal Housing Administration and the Department of Veterans Affairs usually can’t be recast. Check with your servicer, since policies vary.
Will removing PMI lower my payment right away? Once your lender approves the cancellation, the PMI charge comes off your next payment or the one after. The request itself can take several weeks, especially if the lender requires an appraisal.
Information here is general guidance, not specific financial advice. Lender policies vary. Confirm details with your loan servicer before making changes.