How to Lower Your Mortgage Payment

Housing costs are a top line item on virtually every household budget—in fact, the average American homeowner spends roughly one-quarter of their income on their mortgage, according to a recent report from Realtor.com. That's why, if your mortgage payments have been putting you in dire straits, you're certainly not alone. The good news? Financial experts say there are several ways that you can effectively cut costs and kick hidden fees to the curb. Read on to learn how to lower your mortgage payments and finally get your finances under control.

RELATED: 14 Practical Ways to Save Money Each Month.

According to a recent survey conducted by TD Bank, 80 percent of Gen Z respondents who own their own homes put down less than 20 percent for a down payment. This is also true of 77 percent of Millennials, 60 percent of Gen X, and 44 percent of Baby Boomers.

However, if you can afford it, one of the best ways to keep your monthly mortgage costs low is to put down a larger down payment on the principal, thereby shrinking the total amount you'll owe to the bank.

"Doing this will lower the amount of the balance that is due to the bank, as well as lower the amount that is accrued for interest," explains Doug Greene, the owner and operator of Signature Properties. "Even small amounts could go a long way since mortgages tend to be between 20 and 30 years long."

Changing your payment schedule can also help you shave money off of your mortgage payments.

"Traditionally, you would make your payment within the first week of that month," notes Green. However, he shares that some lenders will allow you to pay your mortgage twice a month, three times a month, or even four times a month (once per week).

"When you increase the amount of payments, you end up reducing the loan balance quicker, and therefore, less interest is accrued. Not only does this reduce your monthly payment, but it can also shave years off of your total loan term," he says.

RELATED: 10 U.S. Cities With the Most Homes Under $200,000, New Data Shows.

Refinancing your mortgage at a lower rate is another way to pay less for your home overall.ae0fcc31ae342fd3a1346ebb1f342fcb

"When you refinance, you're basically replacing your current mortgage with a new one that has more favorable terms," explains Michael Foote, a finance expert and the founder of Quote Goat. "Before looking at refinancing, make sure your credit score is in tip-top condition. Typically, if you've built up a good credit history and improved your score since taking on the mortgage, you'll secure lower interest rates."

Greene notes that there's one catch: "Interest rates have been creeping up for the last few years."

However, according to Business Insider, rates have recently begun dropping—so you may be able to score a better deal by watching rates closely and striking at just the right moment. You can compare interest rates using online mortgage tools found on NerdWallet or the Consumer Financial Protection Bureau.

"When applying for a mortgage or refinancing your property, there are lots of additional fees, including application fees, appraisal fees, attorney fees, title search and insurance costs, underwriting fees, and more," explains Claire Flynn, senior content writer for the online mortgage broker Mojo Mortgages. "On average, this can cost between three and six percent of the total loan amount."

"So, given that the average house price in America is $412,000, three to six percent of this amounts to $12,360 to $24,740," she adds. "Therefore, if you can afford to, you should consider paying any additional fees upfront to reduce your overall mortgage balance."

RELATED: 9 Ways to Save Money on Household Essentials, According to Finance Experts.

Greene says another way to lower your monthly mortgage payments is to change the term of your loan. This is a good option if you're struggling with having immediate cash flow, though it's worth noting that you'll pay more overall due to interest payments.

"If you have a lot of equity in your house, you might be able to convert a 15- to 20-year loan into a new 30-year loan, which would reduce the monthly payment," he tells Best Life.

Flynn next recommends using any financial windfalls to get ahead on your mortgage payments, ultimately reducing your total balance and lowering your monthly payments or shortening the duration of the loan.

"If your mortgage agreement allows you to, you could also consider using any unexpected income to pay off your mortgage. Examples include tax refunds, work bonuses, inheritance, and more. By using this cash, you're likely to save on interest by paying your mortgage off more quickly," she says.

RELATED: How to Pay Off Your Mortgage Early, Finance Experts Say.

Every month, a portion of your mortgage payment goes into an escrow account and is used to pay for things like insurance and property taxes.

"Each year, your lender will revise your escrow account and determine if more or less money is needed to fund that," Greene explains. "The escrow account is used for other payments as part of your mortgage, but if you choose to ignore making an additional payment each year, it may increase your monthly rate. You can call your bank today and ask this question or log in and see what your escrow account looks like."

Private mortgage insurance (PMI) is another cost you might not notice is included in your mortgage payment—and Greene says you may be able to save by paying attention to how much you actually owe.

"PMI is added to your loan when you first purchase your house and put down an amount that is less than standard (20 percent down payment). A lot of people forget that they pay this each and every month, but once your equity in the home supports a greater than 20 percent position, you can either call or write a letter to remove PMI from your loan. On average, PMI can be as much as 0.5 percent to 1.5 percent of your loan balance," he says.