Ways to Lower My Monthly Mortgage

Last updated: September 2026 | Los Angeles & Orange County

The most effective ways to lower a monthly mortgage payment are removing private mortgage insurance once you reach enough equity, refinancing to a lower rate or a longer term, recasting the loan after a lump-sum payment, appealing your property tax assessment, and shopping your homeowners insurance policy. As of September 2026, the average 30-year fixed mortgage rate is around 6.71% and the 15-year fixed rate is around 6.04% (Freddie Mac PMMS), and California homeowners are also seeing wide swings in insurance premiums that are worth revisiting every year. Several of these options don't require refinancing at all and can be handled directly through your loan servicer, county assessor, or insurance carrier.

Remove Private Mortgage Insurance (PMI)

If you put down less than 20% on a conventional loan, you're likely paying PMI, which can add $100 to $300 or more to your monthly payment. Under federal law, your lender must automatically cancel PMI once your loan balance reaches 78% of your home's original value, as long as you're current on payments. You can also request removal earlier, once your balance reaches 80% of the original value, provided you haven't been more than 60 days late in the past two years or 30 days late in the past year, and you don't have a second mortgage or other lien on the property.

If your home's value has risen since you bought it, you may hit that 80% threshold sooner than your original amortization schedule suggests, so it's worth asking your servicer for a current payoff-to-value calculation rather than assuming you have to wait. FHA loans work differently: if your down payment was under 10%, mortgage insurance premiums (MIP) typically last for the life of the loan and can only be removed by refinancing into a conventional loan once you have enough equity.

Refinance to a Lower Rate or Longer Term

Refinancing makes sense when your current rate is meaningfully higher than today's averages, or when resetting your loan into a fresh term would meaningfully lower your monthly payment. As of September 2026, the average 30-year fixed rate is around 6.71% and the average 15-year fixed rate is around 6.04% (Freddie Mac PMMS).

Refinancing into a new 30-year term can lower your monthly payment even without a large rate change, simply because you're spreading the remaining balance over a longer period again. That said, this usually means paying more total interest over the life of the loan, so it's worth running the numbers with your lender and factoring in closing costs before deciding whether the lower payment is worth the trade-off.

Recast Your Mortgage

Recasting is different from refinancing. You make a lump-sum payment toward your principal balance, and your lender re-amortizes the loan over your remaining term at your existing interest rate, which lowers your monthly payment without extending your loan or requiring a new one.

Recasting typically has no credit check, no appraisal, and no closing costs, and usually takes two to four weeks with a fee in the range of $150 to $500. It's often a good fit for homeowners who receive a lump sum, such as proceeds from selling a previous home, an inheritance, or a bonus, and want to lower their payment without going through a full refinance.

Appeal Your Property Tax Assessment

Property taxes are usually collected as part of your monthly payment through an escrow account, so a lower tax bill can directly lower your total monthly payment. In California, Proposition 8 allows homeowners to request a temporary reduction in assessed value whenever their property's current market value falls below its Proposition 13 factored base year value. This is separate from a formal appeal: most counties offer an informal decline-in-value review handled directly by the assessor's office, usually with no fee and no hearing required.

These reviews must be requested every year to apply, since they're not automatic, and filing windows and deadlines vary by county, often opening in the summer and closing in the fall. If you believe your home's assessed value is higher than its current market value, it's worth checking your county assessor's website for the specific deadline and process.

Shop Your Homeowners Insurance

Your homeowners insurance premium is also typically collected through escrow, and California's insurance market has shifted significantly in recent years, so a policy you bought several years ago may no longer be your cheapest option. The average cost of homeowners insurance in California is around $1,324 a year, though homes in wildfire-prone areas can see quotes ranging from $5,000 to $25,000 or more. Homeowners on the California FAIR Plan, the state's insurer of last resort, pay an average of roughly $3,000 to $3,200 a year, compared to about $1,480 for a standard admitted policy.

Getting quotes from a few different carriers, raising your deductible, bundling your home and auto policies, or asking about credits for wildfire mitigation work can meaningfully reduce your premium. Since your insurance cost flows directly into your monthly escrow payment, even a modest reduction can lower your total mortgage payment.

Consider a Loan Modification

If you're facing a genuine financial hardship, such as a job loss, medical issue, or other unexpected setback, contact your loan servicer about a loan modification. A modification can adjust your interest rate, extend your loan term, or in some cases reduce your principal balance to bring your payment down to something more manageable. This is different from refinancing, since it doesn't require qualifying for a brand-new loan, but it's generally intended for homeowners experiencing hardship rather than those simply looking to reduce a manageable payment.

Which Option Fits Your Situation

The right approach depends on how much equity you have, whether you have a lump sum available, and whether your current rate is meaningfully above today's averages. Removing PMI and appealing your property taxes are worth checking every year regardless of your other plans, since they cost little or nothing to pursue. Recasting fits best after a windfall, refinancing makes the most sense when rates or your loan term no longer serve you well, and a loan modification is worth exploring if you're dealing with a genuine hardship.

Frequently Asked Questions

Will removing PMI or recasting hurt my credit score? No. Removing PMI and recasting your mortgage don't involve a new loan or a credit check, so neither affects your credit score.

How much can I actually save by appealing my property taxes? It depends on how far your assessed value exceeds current market value, but even a modest reduction in assessed value can lower your annual tax bill and your monthly escrow payment, and the informal review process in most California counties costs nothing to request.

Is a loan modification the same as refinancing? No. A loan modification changes the terms of your existing loan through your current servicer and is generally reserved for financial hardship, while refinancing replaces your loan entirely and typically requires qualifying for new financing based on your income and credit.

Can I pursue more than one of these strategies at the same time? Yes. For example, you can request PMI removal and appeal your property taxes in the same year, or shop your insurance while also considering whether recasting makes sense after a lump-sum payment.

Does shopping my homeowners insurance affect my relationship with my mortgage lender? No. Your lender requires that you carry adequate insurance, but you're free to choose your carrier. You'll simply need to provide your servicer with updated policy information so your escrow account reflects the new premium.

Thinking About Lowering Your Monthly Payment on Your Home in Los Angeles or Orange County?

Whether you're checking on PMI removal, weighing a refinance, considering a recast, or wondering if your property taxes or insurance are due for a second look, I can help you think through which combination of these options fits your situation and connect you with trusted lenders, insurance agents, or resources who can run the specific numbers for your loan.

Send me a message or leave a comment below — happy to help in English or Spanish.

Andrea Pazmino-Pace, REALTOR® — HomeSmart Realty Group
Serving Los Angeles and Orange County
Phone: (636) 590-1290
Email: andreapazpace@gmail.com
Website: askandreahomes.com
DRE #02013784

Important notice: This article is provided for general educational and informational purposes only and is not intended as mortgage, tax, insurance, legal, or financial advice. Loan terms, PMI rules, property tax procedures, insurance rates, and mortgage rates change and vary by lender, county, and carrier. Homeowners should consult their loan servicer, county assessor's office, insurance agent, and financial or tax professionals as applicable before making decisions about their mortgage.

Sources: Consumer Financial Protection Bureau, Freddie Mac PMMS, California Revenue and Taxation Code (Proposition 8), California Department of Insurance, California FAIR Plan (data current as of September 2026)