How to Legally Cut Your Monthly Mortgage Payment in Half

The only way to legally cut your monthly mortgage payment in half is to rework the terms of the loan. Banks, credit unions and mortgage companies have programs for reducing mortgage payments. However, a reduction of 50 percent is an extremely aggressive goal and is sure to require some shrewd negotiation and creativity. You may have to settle for a mortgage payment that is reduced by 50 percent over a temporary period and then escalates to a higher but affordable level from there.

Instructions

1

Make an appointment with a nonprofit housing counselor certified by the U.S. Department of Housing and Urban Development. The counselors are experts in negotiating loan modifications. The Federal Trade Commission recommends that you use a nonprofit counselor and avoid for-profit companies. Many scams have been reported nationally involving for-profit "foreclosure rescue" and loan modification firms, the FTC reported in 2011. Find a HUD counselor in your area by checking the agency's website.

2

Tell the housing counselor you need to cut your mortgage payment in half. Loan modification allows your payment to be reduced by changing key terms in the loan, such as the interest rate, the length of the loan and, in some cases, even the amount due. However, loan modification by a lender is generally considered only for people on the verge of foreclosure because of severe financial problems. Your mortgage company will not modify your loan simply because you'd like to free up some money for other purposes. The housing counselor can tell you if you have a good reason for loan modification.

3

Authorize the housing counselor to contact your lender to formally request a 50 percent cut in your mortgage payment through loan modification. Have the counselor state your case.

4

Reduce your payments another way if you are not having financial problems but have some extra cash. Although it does not happen often, you can cut your monthly payments 50 percent by doing a "cash-in" refinancing. An insurance settlement, for example, or some other windfall might have resulted, allowing you to refinance your mortgage by paying off a chunk of the balance. Contact your mortgage company to ask how much money you would have to pay on your loan to reduce the payments by 50 percent.