Your mortgage is likely the biggest debt that you have. It is for most people who own homes. The amount of money they spend on their mortgage every month on top of the amount of interest that they end up spending can total to a significant chunk of change. Fortunately, there are ways that you can save money on your mortgage..

Make an Additional Payment

Any extra money that you pay towards your mortgage will go towards the principal. This is important to note because a percentage of your regular monthly payments will be going towards the interest you owe on the mortgage. This means that the more you pay towards the principal, the less interest you’ll owe. As a result, you should try to make additional payments wherever possible so that you can pay down your principal and reduce your interest. You can do this by saving up money throughout the year and making one large payment at the end, or by putting extra income towards your mortgage whenever you can (such as if you’ve received a bonus at work or you’ve received a sizable tax return).

Pay Biweekly Instead of Bimonthly

Traditional mortgages require monthly payments, which means that you make 12 payments a year. If you pay every two weeks instead of every month, you’ll end up making 26 half-payments a year, which amounts to 13 full payments. Essentially, by paying bi-weekly, you’ll make an additional full payment every year. Not only will you end up paying off your loan quicker this way, but you’ll save on interest as a result of making an extra payment towards your principal every year.

Refinance Your Mortgage

Refinancing your mortgage can help save you money in a number of ways. The way refinancing works is that you essentially take out a second mortgage in order to pay off your first mortgage. The terms of your second mortgage would basically replace those of your first. You may have been locked into a high-interest rate initially as a result of a poor credit score. If your credit score has drastically improved over the years along with your financial situation — and the market rates have dropped — then you may potentially be able to qualify for a lower interest rate. By refinancing at a lower rate, you could save thousands of dollars in interest.

Another option would be to refinance from a 30-year mortgage to a 15-year. While this would increase your monthly payments, it would significantly reduce the amount of interest you’d end up paying over the long term. Refinancing to a shorter-term might be worth it if your income has increased and you can comfortably make larger payments on your home.

Make a Larger Down Payment

You should always have in mind that the seller does not own your good faith deposit. He or she should also be aware that the money will be used to pay your expenses at the closing. The funds are supposed to be yours until the successful completion of a transaction.

A lot of people are in too much of a hurry to become homeowners. If you can save up a larger amount of money to put into your down payment, then your mortgage will end up costing you less. Not only will monthly payments be less, but your lender will be more likely to offer you a lower interest rate. On top of that, if you make a down payment of at least 20 percent, you won’t have to pay monthly mortgage insurance on top of your mortgage payments.

When you’re ready to buy a home, it’s hard to know what your best options are financially. There’s a lot of information out there. Understanding it all can be challenging. We’re here to help, and can provide some answers to your mortgage questions. Acquiring a mortgage is a big step, and we’re helping people just like you reach their home-ownership dreams. Contact us today!

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