3 Home Refinance Programs to Reduce Your Mortgage Payment

May 7th 2016

There are many ways to take advantage of new lower interest rates, some facilitated by the government and some run by financing companies. Reducing monthly payments is one of the major goals for this endeavor, but reducing the overall term and hence the amount paid overall for the loan at the same time is the ideal outcome. While finance companies seek to maximize their returns too, it is often in their interest to facilitate customers' needs to manage their finances more carefully. This helps to ensure regular payments and satisfied loans, supporting purchasers, mortgage companies and the economy in equal measure.


The Home Affordable Refinance Program was created by the Federal Housing Finance Agency to help homeowners who have managed not to default or miss any payments but have little equity in their homes due to falling house prices. HARP refinance is applicable to mortgages owned by Fannie Mae or Freddie Mac, which includes most mainstream products taken through a bank, mortgage company or credit union.

To qualify, you need to have a loan-to-value ratio of greater than 80 percent, no late payments in the past six months and have taken the loan out prior to June 2009. The program was launched in 2009 but has since been made much more comprehensive so many more people qualify for refinancing deals that reduce interest and monthly payments, thus minimizing the overall costs to the homeowner.

Streamline Programs

Both FHA and VA loans offer streamlined processes for transferring to lower-payment refinance loans of the same type. The VA program is also known as the IRRRL program. Both options involve a minimum of paperwork and can be extremely beneficial to homeowners. No appraisals are necessary, and income verification is minimal. Because of the reduced bureaucratic requirements, costs are minimized, and in some cases, this type of refinance can be virtually free and save you money in the long run due to reduced interest rates and loan length.

Private Refinance Deals

For those homeowners who do not qualify for HARP or any of the other government programs, all is not lost. People who have kept up regular payments and communicated promptly if any issues cropped up can ask their mortgage providers about refinancing deals to help reduce overall costs. Some companies, such as Wells Fargo, even offer a streamlined service to reduce the associated paperwork and speed up the process, allowing you to start making reduced payments much more quickly. It is important to be aware this process may not result in the most beneficial rate reduction, although the overall costs of your mortgage are still reduced from those of the original loan.

Loan modifications are also possible for mortgage holders with less than perfect payment histories, particularly thanks to the government's Home Affordable Modification Program that offers incentives to lenders to make these modifications. However, any reductions to payments made in this way are likely to be at the expense of a longer mortgage term and therefore result in higher costs overall.


Even if you are keeping on top of your mortgage payments, switching to a deal with lower interest rates that shortens your mortgage term or reduces your monthly payments can be a great help with financial planning. The following are a few programs to help you achieve greater financial flexibility and freedom while still honoring your debts.

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