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The financial burden of homeownership doesn't magically ease once you've saved enough for your down payment. Unless you pay full price upfront for your house, you can look forward to years of ongoing mortgage payments. So how can you lower mortgage payments?

Your purchase price, down payment, interest rate and rate structure all affect your monthly mortgage payments. Use these strategies to lower them before or after you close on your house.

Consult With a Mortgage Loan Officer

Before you begin your home search in earnest, schedule a financial wellness discussion with an experienced mortgage loan officer (MLO). Think of your MLO as a partner in your home search. Each MLO understands the myriad financial considerations that go into purchasing a home and can provide helpful guidance to supplement these tips, including factors that determine how much you can afford and a roadmap outlining what to expect (and when) from the moment you begin your search to the day you move into your new home.

Negotiate a Lower Purchase Price

A lower purchase price often means a lower monthly payment. Remember, a home's list price doesn't necessarily reflect its actual market value. Look at recent comparable sales in your neighborhood, sniff out defects that could raise future maintenance costs (such as aging mechanical appliances or structural issues) and assess the seller's motivation level. Use these and other findings to craft a low but fair offer, and reduce your future mortgage payments before you even move into the house.

Increase Your Down Payment

This is another pre-purchase move that can pay off big time for years to come. Sure, you might have to delay your home search while you save up the extra cash, but the savings could be worth it. For instance, reducing a $200,000 principal to $190,000 saves nearly $28 per month — before interest — on a 30-year fixed-rate mortgage. Your MLO can walk you through various scenarios that illustrate exactly how much you stand to save by increasing your down payment.

Consider Paying for Points

"Points" are fixed payments equal to one percent of the mortgage's principal. One point usually corresponds to a rate reduction of 0.125 percent. Consult with your MLO to determine whether paying points is an available option that makes sense for your individual situation. If you have extra cash on hand, paying points at closing is a great way to reduce your payments.

Refinance When Rates Fall

If interest rates fall after you move into your home, consider refinancing your mortgage. Keep in mind that refinanced loans come with substantial fees — they're not always ideal for homeowners planning to sell in the near to medium term. Refinancing may lengthen your repayment term or increase your total interest expense. But if you're likely to stay in your house for five years or longer and can significantly reduce your rate — one percent minimum, and ideally at least two percent — then refinancing makes financial sense. Ask your MLO for refinancing guidance specific to your situation.

Extend Your Term

Extending your mortgage's term is a great way to immediately, and perhaps drastically, reduce your monthly payments. You can extend your term while refinancing (for instance, refinancing a 30-year loan with 20 years left to a new 30-year loan). You can do this at any point during the life of your loan, but the impact is greater when you wait longer. However, extending your loan term may increase your total interest expense when compared to your current situation. Your MLO can help you determine whether a longer mortgage term makes sense for your needs.

Your mortgage rate depends on a lot of factors, notably your credit score and loan type. Ask your MLO for more details and mortgage management strategies.

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

NOTICE: This is not a commitment to lend or extend credit. Conditions and restrictions may apply. Information and offers are subject to change without notice. All loans are subject to credit and collateral approval. Not all loans or products are available in all states. is a federally registered service mark of KeyCorp. NMLS# 399797

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