How Can I Get My Mortgage Interest Reduced?

The Home Affordable Refinance Program helps underwater homeowners refinance their mortgages.

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As you pay off your home mortgage loan, a portion of your monthly payments goes toward interest. A high interest rate on your mortgage means less of your payments goes toward paying off your loan principal. If you want to pay less mortgage interest, you can reduce the interest rate or make extra payments on the principal to pay the loan off sooner -- or both.

Interest Rate

Over the life of your mortgage loan, you pay a certain amount of interest. The higher the interest rate on your loan, the more total interest you'll pay. One way to reduce your total mortgage interest is to reduce your interest rate. While the interest rate on your current mortgage contract can't be changed, you can refinance to a new loan with a lower rate. You can refinance through your current lender or go to another lender. You can qualify for a lower refinance interest rate in a few different ways.

Refinance With Better Credit

One way to get a lower interest rate through a refinance is to apply with a better credit score. Creditors base your interest rate on your risk as a borrower and give a lower rate to applicants with higher scores. If you've consistently made your mortgage payments on time, your credit score should have improved since your original mortgage. Another way to get a lower rate is to have a friend or family member with a better credit score co-sign your refinanced loan. If the market interest rate has gone down since you took out your mortgage, you can refinance at a lower rate.

Government Programs

According to Bankrate, if you don't have at least 20 percent of your loan paid off, it's difficult to qualify for a traditional refinance. A couple of government programs that can help in this case. Homeowners who can't qualify for a traditional refinance can try to qualify through the Home Affordable Refinance Program or the Home Affordable Modification Program. The latter program is for homeowners who can't afford their mortgage payments because the monthly payments exceed 31 percent of their income. Both programs reduce your total mortgage interest because they let you refinance to a lower interest rate.

Pay Down Your Loan

Another way to reduce your mortgage interest is by paying off your loan faster. Since you get out of debt more quickly, the interest has less time to build up. One option is to switch to biweekly mortgage payments. This adds the equivalent of one extra month of mortgage payments each year and shortens your loan. Or you can make larger payments each month, earmarking the excess to pay down the principal. Another option is to refinance to a shorter mortgage, going from a 30-year to a 15-year loan term.