5 ways to save on your mortgage payments this January, according to experts

The mortgage scene is unpredictable right now. Today's mortgage rates remain much higher than the historic lows during the pandemic when many borrowers secured mortgages below 3%. With housing costs and everyday expenses continuing to strain household budgets, finding ways to reduce mortgage payments has become increasingly important. Even a modest reduction in your monthly housing costs could provide meaningful relief.

We spoke with leading mortgage professionals about the most effective ways to lower mortgage costs in the current market. They shared several strategies that could help you save hundreds on your monthly payments in 2025, starting this January.

See how much you could potentially save with a mortgage refinance here.

5 ways to save on your mortgage payments this January, according to experts

Below are five proven tactics worth exploring this month to save on your home loan:

Consider refinancing

If you're among the millions of Americans who locked in a mortgage interest rate above 7%, you may have a chance to reduce your monthly payments through refinancing. "Even a modest reduction in your rate could lead to significant savings over the life of your loan and in your monthly budget," says Debbie Calixto, sales manager at loanDepot.

Homeowners with adjustable-rate mortgages (ARMs) should pay particular attention to refinancing opportunities. If your ARM recently adjusted upward, switching to a fixed-rate mortgage could provide stability and savings.

Learn more about your current mortgage options online today.

Look into mortgage recasting

If refinancing isn't the right fit, mortgage recasting is another promising path. "[This] is often overlooked but highly effective for lowering payments without refinancing," explains Chris Heller, president of Movoto.com. "It's useful for homeowners who've come into savings or windfalls and want to reduce monthly costs without extending the loan term."

The process typically requires a lump sum payment toward your principal balance. Jeff Taylor, a board member of the Mortgage Bankers Association and managing director at Mphasis Digital Risk, notes that most lenders require at least $5,000 or 10% of your remaining loan balance. That is then applied, allowing the lender to re-work your monthly payments according to the new, lower principal owed.

Make extra principal payments strategically

Making extra payments toward your mortgage principal can reduce overall loan costs and accelerate your equity building. "[See what] other debts [you can cut] to lower your monthly obligations. Even if you cannot refinance your mortgage, you can improve your monthly cash flow," Heller advises. Consider taking these steps to put extra money toward your principal: 

• Set up biweekly payments instead of monthly ones, which results in one extra payment each year
• Round up your regular payment to the nearest hundred dollars
• Apply tax returns or bonuses directly to your loan balance

Every little bit counts. But before starting any payment strategy, consult your lender. They'll explain how to ensure your additional payments go directly to the principal and let you know if your loan has any prepayment penalties.

Eliminate private mortgage insurance (PMI)

Calixto highlights another effective strategy: eliminating private mortgage insurance. You're likely paying this if your down payment was less than 20%.

The process differs depending on your loan type and your lender can tell you whether you qualify. Generally, "[you may] petition [your] lender to have the PMI removed if [you've] gained 20% equity or greater in [your] property," says Dean Rathbun, executive vice president of United American Mortgage Corporation. "There are rules and requirements to have [your] PMI removed, but it's worth having it evaluated."

Appeal for a property tax reassessment

"[If you] can't qualify for refinancing, [you may be able to] lower monthly payments by appealing for a property tax reassessment and/or exemption, especially if home values in [your] area have declined," Taylor points out.

Since property taxes make up a sizable portion of your monthly mortgage payment, a successful appeal could lead to decent savings. Contact your local tax assessor's office to get started. You may need recent sales data from comparable homes in your area to support your case.

The bottom line

"When evaluating mortgage-saving tactics, there's no one-size-fits-all solution," Calixto emphasizes. Before choosing a strategy, get clear on your priorities. Is it lowering monthly payments, reducing total interest or paying off your loan faster?

With some experts projecting mortgage rates to drop by the end of 2025, now can be an ideal time to speak with a mortgage professional about your options. They can review your current loan terms, calculate potential savings from different strategies and monitor rates for better opportunities in the months ahead.