The most common and well-known way to reduce mortgage payments is to refinance your loan. This entails applying for an entirely new mortgage loan, paying closing costs, and using the proceeds to pay down your old mortgage. Many borrowers with an adjustable-rate mortgage, for instance, often choose to refinance to a fixed-rate mortgage loan for more predictable and often lower payments. Others, including those with a conventional loan, opt to liquidate equity at closing via a cash-out refinance loan.

“This method typically only makes sense if it leads to a lower interest rate than it was before,” suggests Filip Telibasa, a Certified Financial Planner with Benzina Wealth, LLC. “If you are determined to proceed with a refinance, you should review your breakeven point. This determines how long it will take for you to recoup your closing costs via the new lower payments. You need to ask yourself: Do you still plan to be in the house by that time?”