Managing a Home Loan

The monthly mortgage payment can take the lion’s share out of your monthly income. You can reduce that share in several ways:

• Refinance your mortgage to a lower interest rate
• Seek a loan modification with an extended term and reduced payments
• Get a tax reassessment to reduce property tax
• Stop paying private mortgage insurance if you have 20% or more equity in the property
• Shop for more affordable homeowners insurance
  

Your mortgage payment is due on the first day of the month. It becomes late (and your servicer can charge a late fee) if it is not paid by the 15th of the month. Your mortgage payment goes into default if it is 30 days late (and your servicer may report your account to the credit bureaus). After 120 days late, your servicer may begin foreclosure proceedings .

You can calculate your mortgage payment by hand, or you can use a mortgage calculator . Whichever way you go, you’ll need to gather some data: the loan amount, the interest rate, the number of years you have to pay, the number of payments per year, the type of loan, the market value of the property, and your income. Those last two will help you calculate other important figures, like the equity or your debt-to-income ratio .

Your mortgage payment may go down over time, but it depends on several factors. With an adjustable-rate loan , your interest rate can change and, thus, your mortgage payment, too. Refinancing your loan may also reduce your mortgage payment. If neither of these scenarios applies, your payment will remain roughly the same (excluding changes to property taxes, PMI, home insurance, or servicer fees).

Making extra mortgage payments could help you shave years off your loan term, and that means paying less interest in the long run. If you do choose to make extra payments, make sure they’re paid toward the principal . Also, be sure to read your loan’s fine print—some mortgages may come with prepayment penalties if you pay them off too early.