5 practical tips for homeowners

Mortgage payments take up more than a third of the typical U.S. household’s income, according to the Q2 2025 National Association of Home Builders/Wells Fargo Cost of Housing Index. For lower-income families, their monthly mortgage payment is a much higher percentage of their salary. Lowering your monthly payments can keep you from being house poor and free up cash flow for other expenses.

“Your mortgage payment is typically the largest expense you have each month,” Ashley Morgan, bankruptcy and debt attorney at Ashley F. Morgan Law, told Yahoo Finance via email. “Finding a way to lower your mortgage payment is an ideal goal to help your budget.”

There are several ways to lower your monthly bill, but the best fit will depend on your personal finances and stage in life. Be sure to weigh what’s reasonable for your situation to make the best decision for you and your family.

Best for: Homeowners with good credit

When you refinance your mortgage, you replace your current home loan with a new one. Just like when you bought the house, you’ll likely need to qualify and apply with a mortgage lender. You’ll also have to pay closing costs again.

A higher credit score can help you secure a lower mortgage rate, directly reducing your monthly payment.

For example, the monthly payment on a 30-year, $350,000 mortgage with a 6.5% interest rate is $2,212. Refinancing to a 5.5% interest rate lowers the monthly payment to $1,987 — saving you about $225 each month.

You also have the option to change your loan term length. A 30-year mortgage usually comes with lower payments than a 15-year mortgage. So, let’s say you have 25 years left on your 30-year loan term. By refinancing it into another 30-year mortgage, you could lower your payments by even more.

However, a longer repayment timeline will cost you more in interest over the loan’s term. It also adds years onto your repayment schedule, so it will be longer until you own the home outright.

Best for: Homeowners with a cash windfall

With a mortgage recast, you make a lump-sum payment that reduces your home loan principal. The lender then recalculates your monthly payment based on the lower balance. You’ll pay less each month and keep the same interest rate — a huge benefit if you’ve already locked in a low rate. You would also keep your current term length rather than refinancing into a longer or shorter term.

Here’s an example of what a mortgage recast could look like.

• Let’s assume you have a 30-year, $400,000 mortgage with a 6.5% interest rate and a monthly payment of $2,528.

• After five years, your balance is $373,944, and you decide to put a $50,000 inheritance toward the mortgage principal, lowering your outstanding balance to $323,944.

• Recasting your mortgage based on this lower principal also lowers your monthly payment from $2,528 to $2,187, resulting in a monthly savings of $341.

A recast could require a substantial investment to be worthwhile. Not all mortgages qualify (for example, you cannot recast an FHA, VA, or USDA loan), and not every lender offers them. Those who do offer a recast may charge a fee.

Best for: Homeowners with PMI and 20% equity

Private mortgage insurance (PMI) typically costs between $30 and $70 monthly for every $100,000 borrowed, according to Freddie Mac. That means with a $350,000 loan, you could be paying $105 to $245 each month, just in PMI.

You’ll typically pay for PMI if you got a conventional mortgage and made a down payment of less than 20% when you originally bought the home. However, you can cancel it once you have 20% equity, whether through the home’s value appreciating or paying down the principal.

PMI ends automatically when your balance reaches 78% of the original appraised value (meaning you have 22% equity). However, you can request that your mortgage lender remove your PMI earlier — lowering your payment sooner — provided you’ve reached the equity threshold, made on-time payments, and don’t have a second mortgage or other liens.

Best for: Homeowners with no insurance claims

According to the National Association of REALTORS®, the average annual homeowners insurance premium in the U.S. was $2,377 in 2024 — nearly $200 per month. If you have filed claims or live in areas with severe weather, your premiums could be higher.

To reduce this cost, start by asking your provider what discounts are available. You can also modify the policy by increasing your deductible, if it doesn’t add too much risk. Lastly, compare your current insurance rates with those of competing and reputable insurance providers. Shopping around for homeowners insurance helps you get the best deal.

Best for: Homeowners with overassessed home values

Tax assessors regularly assess homes’ values to determine how much the owners will pay in property taxes. This process could take place annually or once every few years, depending on where you live.

Sometimes homes are overassessed, meaning they’re assigned a higher market value than the home is worth. If this is the case, you may be paying more than necessary in property taxes.

“Appealing your property taxes is possible, but often difficult,” said Morgan. “You can try to challenge the tax assessment … However, in my experience, most tax assessments are lower than fair market value.” In her experience, homeowners’ appeals are rarely successful.

However, if you believe your tax assessment is too high, you can file an appeal with your local tax assessor. You’ll likely need to provide proof of your home’s value, such as an appraisal, comparable sales, or records that detail the property’s characteristics. Contact your local tax assessor to begin the process.

If you’re having trouble keeping up with your monthly mortgage payments, first reach out to your lender to discuss your full range of options. Here are a few they may mention.

• Loan modification: A mortgage loan modification permanently adjusts your loan’s terms if you can demonstrate financial hardship. The lender may lower your interest rates, lengthen the term, or even bring down the principal balance.

• Mortgage forbearance: You may qualify to pause or lower your mortgage payments temporarily. But you’ll need to repay any deferred payments once the forbearance period ends.

• HUD counseling: The U.S. Department of Housing and Urban Development (HUD) partners with local housing agencies to provide counseling and potentially help you avoid foreclosure. Find a local agency to see what’s available near you.

Yes, a mortgage refinance can lower your monthly payment. If you qualify, you can refinance into a new loan with a lower interest rate, directly reducing your bill and total interest paid. You may also choose to lengthen your loan term. This increases what you’ll pay in interest over the loan’s term, but your monthly payment could be significantly lower.

If refinancing isn’t a good fit, consider recasting your mortgage. With a recast, you make a substantial lump-sum payment and have the lender spread the remaining balance over your loan term. You can also look for ways to lower your homeowners insurance premiums or appeal your property taxes (if your home was overassessed).

Homeowners who can’t afford their mortgage payments should first call the lender to understand their options. If you’re experiencing financial hardship, you may qualify for a loan modification program, forbearance, or counseling through a local housing agency.

Laura Grace Tarpley edited this article.