How to Minimize Your Monthly Payment with Your Lender

This evening I was preparing for my Cash Flow Explosion presentation on how to improve cash flow on your rental properties for our local investor club. The Cash Flow Explosion presentation is pretty much the same presentation that I gave to Nomads a month or so ago called How to Improve Rental Property Cash Flow.

At the start of that presentation I talk about the importance of using the Lowest Monthly Payment Guarantee Checklist as a starting point for making sure you’re maximizing your cash flow on your rental properties. So, I decided to also share with you the section of that checklist that deals with your lender.

So, without further delay, here is the first part of the lowest monthly payment checklist.

How to Minimize Your Monthly Payment with Your Lender

Discuss the following strategies with your lender as early in the process as possible for minimizing your monthly payment. You may want to talk to more than one lender as different lenders have different loan programs and will answer these questions differently resulting in different monthly payments for you.

  • How much will my payment be reduced if I put more money down and lower the amount I am borrowing?
  • Will putting more money down also reduce my interest rate?
  • How much do I need to put down to reduce my interest rate?
  • Can I put even more down to reduce my interest rate even more?
  • What will my monthly payments be at the reduced interest rate?
  • With the loan program we are thinking about using, can I ask the seller to pay closing costs? Loan costs? Which ones?
  • Can I ask the seller to pay points to reduce my interest rate? How much does the seller need to pay and how much will it reduce my interest rate? What will that mean for my monthly payment? Are these short term buy downs? Can I do permanent, long term buy downs?
  • Can I do a longer term loan to reduce my payment?
  • Can I do a shorter term loan to reduce my interest rate? Will that ultimately lower my payment or raise it? It usually raises it.
  • Can I get a lower interest rate if I am willing to do an adjustable rate mortgage? What will that do for my monthly payment?
  • If I got the seller to carry back some owner financing, could that lower my loan to value with you and reduce my interest rate? What would that do to my payment?
  • If I did an interest only loan instead of an amortizing loan, would that lower my payment? This can have negative side effects.
  • If I did a negative amortization loan, would that lower my payment? This can have significant other negative side effects.
  • Is there anything I can do to improve my credit score (short term or long term) to get my interest rate lower? Is there something I could pay off? Is there an account I can close? Is there an account I should open?
  • If I sign up for automatic payments will that reduce my interest rate?
  • If I have another account with the lender will that reduce my interest rate?
  • Can I lock my interest rate now and reduce it if interest rates go down between now and when I actually get my loan?
  • Can you buy the one with the help of a family member of friend to lower your interest rate?
  • If more than one person is buying the home, can you remove one person from those buying it that is bringing your interest rate or ability to lower your payment down? Maybe, with the help of your attorney you can make arrangements for them to own the home with you after the purchase.
  • Can I use a partner to buy the home with me or for me?
  • If I use another lender that has lower fees and you’re rolling these fees into your loan, using a lender that has lower fees may lower your overall monthly payment.

See also How to Minimize Your Monthly Payment with Your Lender for more detailed information.

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