When it comes to monthly expenses, your mortgage payment is likely one of the biggest chunks eating up your budget. Most people feel like they’re stuck with that number, thinking, “It’s just what I owe every month.” But here’s the truth: there are smart ways to save on your mortgage and shave years—and thousands of dollars—off your loan. Think of it like rolling up your sleeves, grabbing some scissors, and cutting out the extra cost.
Whether you’re looking to pay off your house faster, lower your monthly bill, or kick unnecessary fees to the curb, a few savvy moves can help you keep more of your hard-earned cash where it belongs: in your wallet. Let’s dig into some simple, practical ways to save on your mortgage, so you can put your money to work for you and move one step closer to financial freedom.
1. Refinance to a Lower Interest Rate
One of the biggest ways to cut down your mortgage payment is by refinancing to a lower interest rate. Here’s the deal: even a small drop in your rate, like from 5% to 4%, can save you thousands over the life of the loan. Mortgage rates fluctuate all the time, so if today’s rates are even 1% lower than what you’re currently paying, it’s worth checking out.
But don’t jump into refinancing just because it sounds good. You’ve got to do the math and understand the costs involved. Refinancing comes with fees—typically around 2-5% of the loan amount. Make sure those costs don’t outweigh the savings. And don’t get locked into a new loan term that drags things out longer than necessary. Aim to refinance to a lower rate while sticking with the same timeline, or even a shorter one, so you’re not paying off your house till the cows come home.
Here’s an action step: check out quotes from reputable lenders and compare rates. Just make sure to look for a lender who’s upfront about fees and willing to give you a clear breakdown.
2. Make Extra Principal Payments
If you want to knock years off your mortgage and save a boatload in interest, start paying a little extra toward the principal. Here’s how it works: when you send in extra money on top of your regular monthly payment, that extra amount goes straight to the principal balance—the money you actually borrowed—not the interest. By chipping away at the principal, you’ll shrink the amount the bank can charge interest on, which reduces the overall cost of your loan over time.
And no, you don’t have to send in an extra thousand bucks every month to see results. Even an extra $50 or $100 a month can make a big dent in your balance and shorten the life of your mortgage. If you really want to watch those numbers drop, set up an automatic transfer for that extra payment amount. Think of it like throwing a little extra fuel on the fire each month—it all adds up over time.
So here’s your action step: decide on an amount you can comfortably add each month, even if it’s small. Make it automatic if you can, so you won’t even miss it. And remember to specify with your lender that those extra funds should go directly toward the principal. Over time, those small extra payments will snowball into big savings, helping you pay off your home faster and keep more of your money where it belongs.
3. Switch to Biweekly Payments
Switching to biweekly mortgage payments is a smart, simple way to pay off your mortgage faster without even feeling it. Here’s how it works: instead of making one full mortgage payment each month, you split it in half and pay that amount every two weeks. Now, this might sound like you’re just shuffling the same amount around, but there’s a sneaky advantage here. By the end of the year, you’ll have made 26 half-payments—equal to 13 full payments instead of 12. That’s an entire extra mortgage payment going straight toward your balance every year, without the pain of actually writing a bigger check.
What’s great about biweekly payments is that you’re essentially tricking yourself into making an extra payment. This extra payment cuts down the principal, saving you a nice chunk in interest and shaving a few years off your loan term. The best part? It’s a small enough shift that it usually doesn’t disrupt your monthly budget.
Here’s your action step: call your lender and see if they allow biweekly payments. Some mortgage companies make this option easy, but others may require you to arrange it yourself through your bank. Once you’ve got it set up, sit back and watch those savings start stacking up.
4. Get Rid of PMI (Private Mortgage Insurance)
If you’re still paying Private Mortgage Insurance (PMI), it’s time to make a plan to kick it to the curb. PMI is an extra monthly cost tacked onto your mortgage if you put down less than 20% when you bought the home. It’s essentially insurance for the lender in case you default, and it doesn’t do a thing to help you. But here’s the good news: once you’ve built up enough equity—usually 20%—you can ask your lender to remove it.
The first step is to figure out where you stand on equity. If you’ve been in your home a while or home values have increased in your area, you might already be there. Sometimes, all it takes is a quick check on your mortgage balance and an estimate of your home’s value to see if you’re ready to ditch PMI. If you think you’re close, reach out to your lender and request a formal assessment or home appraisal. Once they confirm that your equity is high enough, PMI can be taken off your monthly payment.
Here’s your action step: calculate your equity and call your lender to ask about removing PMI. Sometimes they’ll require an appraisal to make it official, so be prepared for that small upfront cost. But don’t worry—that one-time expense is worth it if it means saving hundreds of dollars each year. Getting rid of PMI is a smart, one-time move that could free up serious cash each month, putting you that much closer to paying off your home faster and enjoying more financial freedom.
5. Consider a Shorter Loan Term
If you’re serious about paying off your house early and saving big on interest, switching to a shorter loan term is one of the most powerful moves you can make. Most folks sign up for a 30-year mortgage because the monthly payments are lower, but here’s the catch: you end up paying nearly double the home’s original price in interest over three decades. By switching to a 15-year mortgage, you not only cut the loan term in half, but you also lock in a lower interest rate, which means you pay way less in total interest. It’s like fast-forwarding your way to mortgage freedom.
Of course, a shorter loan term means your monthly payments will be a bit higher, so it’s crucial to make sure you’re in a financial position to handle that. If you’re debt-free, have a solid emergency fund, and are already knocking out other financial goals, then this could be a great option for you. The beauty of a 15-year mortgage is that it forces you to pay off your home faster, even if you’re tempted to stretch it out.
Here’s your action step: run the numbers using a mortgage calculator and compare a 15-year term with your current 30-year mortgage. Check in with your lender, too, to see what your new payment might look like and whether you can comfortably swing it. Remember, a shorter term isn’t for everyone, but if you can make it work, the payoff is huge. You’ll save thousands in interest and be mortgage-free in half the time—giving you the financial freedom to use that money for the things that really matter to you.
Conclusion
Saving money on your mortgage isn’t about one big change; it’s about taking a few smart, calculated steps that add up to real savings over time. When you refinance to a lower rate, make extra principal payments, switch to biweekly payments, remove PMI, or consider a shorter loan term, you’re shaving down the cost of your mortgage one piece at a time. Every dollar you save is a dollar that stays in your pocket, putting you closer to true financial freedom.
The key is to pick one or two of these strategies and take action. Don’t just think about how nice it’d be to pay off your home faster—start making moves to make it happen. Even small changes, like adding a little extra to your principal each month or switching to biweekly payments, can make a huge difference in the long run. Remember, the goal isn’t just to pay off your house—it’s to take control of your finances and build a life where you’re not beholden to debt.
So, what’s your first step? Call your lender, crunch some numbers, and set up an automatic payment or two. You’re closer than you think to knocking out your mortgage and getting one step closer to financial peace.
Frequently Asked Questions (FAQs)
1. Is refinancing worth it if I plan to move in a few years?
Great question! If you’re planning to move soon, refinancing may not be worth the upfront costs since you need time to break even on those fees. Generally, if you’re staying put for at least 5 years, refinancing to a lower rate can pay off. But if a move is coming up sooner, focus on other ways to save on your mortgage.
2. How much extra should I pay toward the principal each month?
Any amount helps! Even an extra $50 or $100 a month can make a difference over the long haul. Ideally, try to make an extra payment each year or add 1-2% of your loan amount toward the principal monthly. Set a target that fits comfortably within your budget, and stick to it. Every little bit you knock off the principal saves you money in interest.
3. Does switching to biweekly payments really make that much difference?
Absolutely! Biweekly payments add up to an extra full payment each year, which might seem small but can cut years off your mortgage. The extra payment goes straight toward your principal, helping you save big on interest without you even feeling it. It’s a smart, simple way to pay down your loan faster.
4. When should I ask my lender to remove PMI?
Once you’ve got 20% equity in your home, it’s time to talk to your lender about dropping PMI. Check your mortgage balance and the estimated value of your home. If you think you’re there, call your lender—they may require an appraisal, but getting rid of PMI can save you hundreds each month, so it’s worth the effort!
5. Should I go for a 15-year mortgage if I want to pay off my house faster?
If you’re financially ready, a 15-year mortgage is a fantastic option because it cuts down the term and the interest rate, saving you a ton in the long run. Just make sure you’re debt-free, have a solid emergency fund, and can comfortably manage the higher payment. If you’re ready for it, a 15-year mortgage will get you to mortgage-free living twice as fast!
These tips, along with a game plan for your specific situation, can help you take control of your mortgage, reduce your debt faster, and move you closer to financial freedom. Don’t just read about these options—start taking action and watch your savings grow!