Your Home Sold Guaranteed Realty — The Nathan Clark Team

Can You Get a Lower Interest Rate Without Refinancing?

4 Ways To Get a Lower Interest Rate Without Refinancing

Wondering whether it’s possible to get a lower interest rate without refinancing? With interest rates currently rising to new highs, refinancing may not be a great option for homeowners looking to save money on their mortgages. 

Other homeowners may not want to deal with the hassle of paperwork and going through the underwriting and appraisal processes all over again.

While there aren’t many options available to get a lower interest rate without refinancing, there are a few steps homeowners can take to lower their monthly payments. In this post, our team at Your Home Sold Guaranteed Realty — The Nathan Clark Team will discuss four ways to lower your rate while avoiding refinancing.

How Does Refinancing Work?

When you refinance your mortgage, you’re essentially going through the loan application process all over again. You can choose to use the same lender or shop around and find a new one.

To begin refinancing, you’ll need to submit your financial information to the lender before choosing your new loan. Once you’ve decided on the terms of the loan, you’ll have to go through a home appraisal and wait for the lender to complete the underwriting process. 

After that, the loan moves into closing. At this point, you’ll sign and fill out the remaining paperwork and pay closing costs to make your new loan official. 

Closing during a refinance is faster than closing with a new home purchase. However, the process can still take anywhere from 30 to 45 days. For this reason, and to avoid all the paperwork, some homeowners may want to consider alternative options for lowering their interest rate. 

This may especially be the case for homeowners who are struggling financially and don’t have a good enough credit score to refinance to a better loan.

Unfortunately, in most situations refinancing is the only option available for homeowners who want a lower interest rate. However, there are some situations where you may be able to avoid refinancing by saving money in other ways.

4 Ways To Save Money On Your Mortgage Without Refinancing

1. Recast Your Mortgage

The first way to lower your interest without refinancing is by recasting your mortgage. Recasting is when you pay a lump sum of money towards the principal balance of your loan and then have the lender recalculate your monthly payments. The lender usually does this for a fee, which tends to be lower than the cost of refinancing.

Recasting is different from simply paying down your principal balance because it lowers your monthly mortgage payment. If you were to simply pay down your principal without recasting, your monthly payment would continue to be the same amount. Either way, your interest rate and loan terms will stay the same. 

In order to recast your mortgage, you’ll need a lump sum amount of anywhere from $5,000 to $10,000. The amount may be lower or higher depending on the specific lender.

2. Get Rid of Your Mortgage Insurance

If you took out a conventional loan and paid less than 20% on your down payment, then you likely had to sign up for private mortgage insurance (PMI) as a term of your loan. 

PMI adds extra costs to your monthly mortgage payment. But once you have at least 20% equity in your home, you can cancel it. Simply reach out to your lender and ask them about removing your insurance.

If the lender rejects your request, you can get your PMI removed by reducing the loan-to-value ratio of your home to 80%.

3. Change Your Payment Plan

You can ask your lender for a mortgage modification if you’re currently facing, or expecting to face, financial hardship. If this hardship has caused you to be late with your monthly payments or unable to afford them altogether, then you may be able to get some help from your lender.

A mortgage modification is one of the only ways you can get a lower interest rate without refinancing. The lender may also be able to help you by decreasing your principal balance or increasing your loan term. 

You’ll only be able to qualify for a modification if you have a difficult financial situation, which you’ll need to prove to the lender. However, asking for a modification should be a last resort, as falling behind on your mortgage can have a negative impact on your credit score. 

4. Ask Your Lender

Lastly, it doesn’t hurt to simply ask your lender if you can get a lower interest rate without refinancing. If you’re struggling with your mortgage, the lender may be willing to lower your rate to help you stay afloat.

If you’re not struggling financially, it’s possible some lenders may lower your rate because they want to keep you as a reliable customer. These lenders may value your timely payments and, as a result, might be willing to sacrifice some interest just to keep you as a client.

Even if the answer is likely to be no, it doesn’t hurt to ask and see what your options are.

We Can Help You Buy a Home in New England

If you need to save money on your mortgage, there are a number of options available to you aside from refinancing. 

However, it’s important to consult with a lending professional to make sure that you’re really getting the best deal on your mortgage over the long run. It’s a good idea to visit several lenders until you find one that meets your needs.

If you need help finding a lender you can trust, one strategy is to consult with an experienced realtor in your area.

At Your Home Sold Guaranteed Realty — The Nathan Clark Team, we’ve been serving New England for over 21 years. During that time, we established ourselves as an authority in the real estate market.

Our home buyer clients know they can turn to us for high-quality customer service, knowledgeable advice, and a network of trustworthy lenders and other real estate partners.

On top of that, we offer several buyer’s guarantees that make home buying with us risk-free.

To learn more about our real estate team, give us a call at 401-288-3557 or fill out the form below for more information.


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