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Lower Monthly Payment
You can reduce your monthly payment in one of two ways:
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Refinance to extend the term of your loan.
By extending the term of your loan, you can lower your monthly payment even
if rates have remained unchanged. Keep in mind, however, that you will
increase your total interest costs for your loan.
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Refinance from a fixed rate loan to an ARM.
Another way to lower your monthly payment is to switch from a fixed rate
loan to an Adjustable Rate Mortgage (ARM). ARM's adjust each year based on a
market rate index which means your monthly payments could increase to the
amount of your previous loan is the market rates also increase. If you plan to
stay in your home a long time, this option may cost you more over the life of
the loan.
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