How to Save Money on Mortgage – 8 Best Tips

The mortgage is one of the most significant expenses in most people’s budget and there is a real need to have a strong strategy in place in order to keep this expense from taking over your life.

There are key tips to understand how to save money on your mortgage that can greatly reduce how much you are paying.

The 8 key tips to focus on include:

Refinance the Mortgage

Modify Your Specific Loan

Make Consistent Additional Payments

Make Bi-Weekly Payments

Eliminate Private Mortgage Insurance(PMI)

Connect With Useful Resources

Budget Effectively For All Expenses

Decrease Property Taxes

These tips are likely able to keep this expense from consuming too much of your budget.

Through this post I will focus on providing helpful and valuable information on how to save money on mortgage.

House
Prepare for Getting a Mortgage

Tips to Prepare for Getting a Mortgage

These tips should focus on questions to ask and ideas to prepare for this big financial step.

You should try to assess your financial situation to determine whether it is a good idea for you to take on a mortgage. A mortgage is a big, consistent expense that needs to be properly prepared for.

Some good ways to be better prepared for a mortgage is to have the following established:

  • 3-6 months Safety Net
  • Save 15% of the price of the home Price
  • Paid off all other debts

If you take on the mortgage expense before having these 3 things in place you are more likely to be over burdened. Once you have these 3 things established, then you are prepared to take on the mortgage expense.

You don’t necessarily have to have these 3 things set up but it will give you a greatly better chance at being prepare for the mortgage step.

Are You Able to Pay Off Your Mortgage Early?

This is an important question to answer because there can be some mortgage companies that have rules for how you can actually pay off your mortgage early.

Contact your mortgage company first. They should be able to tell you when you can actually make extra payments and if there are any additional fees for paying off a mortgage early.

Most mortgages can be paid off early now without any penalties but it is still a good idea to double check your mortgage.

Each company has a little different rule for paying off a mortgage. Before you get started on coming up with strategies for paying off your mortgage sooner check in with your current mortgage company to get key information.

Refinance the Mortgage

Refinancing the mortgage can be a big way to change how much you owe each month. You have to be careful here because there can be extra fees involved for the refinancing process.

It is important to determine what your goal is for refinancing because this will guide you on your refinancing path. If you are hoping to get your monthly payment reduced by getting a lower interest rate, then this could potentially be worth doing.

You can visit this website in order to determine whether it makes sense for you to refinance and if there is any money to be saved. This refinance calculator can give you an accurate estimate of what you will pay if you try to refinance your mortgage.

Modify Your Specific Loan

Modifying your specific loan could be possible if you are going through a financial hardship or are late on payments. You can check out MakingHomeAffordable.gov for tips on how to reduce your interest rate, forgiveness for some of your principal or a lower monthly payment.

This is a website designed to connect you with other potential resources for paying off a mortgage.

You can also try to use Modest Needs which is a nonprofit that specializes in granting short term financial assistance to lower income individuals. If you are behind in payments for your mortgage and about to slip under the poverty line, then this could be a great resource to try out.

The poverty line in the U.S. for a 2 person household is if you make under $16,910 and for 4 people in a household it is under $25,750 per year. To qualify for a Modest Needs assistance you usually need to be living relatively close to this line for income.

If you are in need of a financial boost and can’t get the assistance from other programs, reach out to Modest Needs.

Make Consistent Additional Payments

Making consistent additional payments will help you pay off the mortgage amount sooner and end up paying less in interest.

There is a good method for finding more money that can be used for paying off the mortgage. This involves looking at your current budget and determining if there is any significant room for improvement.

I like to focus on the more changeable expenses including:

Food

Car Insurance

These 2 expenses all have ways to reduce the amounts that they cost.

The Food expense can be reduced by preparing much more food at home. Become a food prepping machine and you will be able to save tons.
If you still want to go out to eat at restaurants and save money, focus on a few key tips.

Drink water as your beverage, don’t eat dessert and share a meal with someone. These 3 tips can quickly reduce the expense of going out to eat.

If you are interested in learning more about saving money while going out to restaurants, read How to Save Money At a Restaurant.

Red Car
Reduce Car Insurance Expense to Help With Additional Mortgage Payments

The Car insurance is a key area that can have money saving potential. This area can likely be reduced in your budget by reviewing your current policy.

Reviewing your car insurance policy can help you find areas where you can improve. Most people pay extra for car insurance and can reduce how much they are paying for either no difference in coverage or very little difference.

Comparing how much you are paying with your insurance company and other companies could give you vital information about how to save money in this area. Some car insurance companies offer the same comprehensive coverage but each can have significantly different prices.

Compare your car insurance to see if there is any change that can be made and then focus on the details of your policy. There are main areas within a car insurance policy that can often be changed to save money.

Look at all of your main areas, including Collision, Comprehensive and Bodily Injury Liability, Property Damage and Uninsured Motorist. If you are willing to increase your deductibles, then you are going to save money.

It is important to still keep yourself protected so be mindful about increasing your deductibles past a certain amount. I think of it as the higher the deductible the more responsible I have to be when I am driving.

Make Bi-Weekly Payments

Make a payment every other week to increase how much you are paying for your mortgage. If you do this every other week, then you will have made 26 half payments in a year. These 26 half payments will be equal to 13 full payments over the course of a year.

This will allow you to make a full extra payment a year, which can end up being a significant savings. You can switch to a bi-weekly payment plan with your lender easily. You usually contact them and it can get started in the next month.

It is important to ask your lender whether your extra payments are being credited the way you want them to be credited. You ideally want your extra payments to be going straight towards the principal and you should make it clear that this is possible through your lender.

A way to start doing a bi-weekly payment yourself is by taking your yearly mortgage amount that you would pay and divide it by 12. This will give you a monthly payment that includes your normal monthly mortgage payment and then a little extra payment.

The end result for the year is going to mean that you will save significant amounts of money especially if you have a larger mortgage payment and higher interest rate.

Eliminate Private Mortgage Insurance(PMI)

Private Mortgage Insurance(PMI) is something that is required for all people who put a down payment of less than 20% on their mortgage. You can eliminate private mortgage insurance by informing your lender to cancel your mortgage insurance as soon as you get over 20% paid off on your home.

The PMI can often be hundreds more a month but depends on the size of the mortgage and what interest rate you have. If you are able to eliminate the PMI from your mortgage expense, then you will likely be able to save $100 or more per month.

Use this calculator to help determine what your PMI is going to be and how to reduce this expense.

Use Specific Calculators

Connect With Useful Resources

Connecting with useful resources can be hugely helpful for finding good information for how to decrease the mortgage expense. Three great resources for getting additional valuable information include:

ThePennyHoarder

DaveRamsey

NerdWallet

Each of these resources has valuable information about paying off a mortgage sooner.

The Penny Hoarder has articles that focus on tips for when it is your first home buying experience or whether you have done this before. They provide key information about what extra costs could be incurred for new home buyers and what you should be prepared for during the whole home buying process.

They have a whole section dedicated to Home Buying and reducing this expense. I love searching this website for information on saving money because they have tons of useful tips. They have a team dedicated to researching and providing you with the best information for saving on your home mortgage expense.

Dave Ramsey has many resources available to aid in making the home buying process much easier and more affordable. The main feature he talks about going for is to get a 15 year, fixed rate mortgage as opposed to a 30 year, fixed rate mortgage.

Ramsey has been able to help many people get out of debt and pay off their mortgages much earlier.

Check out this mortgage payoff calculator for help with calculating the math of your new mortgage paying off strategies. This calculator lets you enter the home value, down payment, type of mortgage and interest rate for your mortgage.

After you have entered this information, it will give your monthly payment and break down how it came out to be that amount. The payment is usually broken down into the principal and interest, property taxes and homeowner’s insurance.

NerdWallet is a website that wants to help give objective advice and provide helpful tools for people to make smart money moves. They have many articles designed to get you informed about where you stand for your mortgage payment.

You can compare your mortgage rate to others in your areas and learn about 15 year and 30 year fixed mortgage rates. They have specific calculators designed to give you key information about refinancing, as well as a cost of living calculator and down payment calculator.

They also have a section called Read ad Learn which is designed to give you information about the worth of your home. Utilize any of these resources to get useful and practical information to aid you in reducing your mortgage payment.

Budget Effectively For All Expenses

Budget Effectively For All Expenses

Budgeting effectively for all expenses can greatly increase how fast you pay off your mortgage amount. I like to review my budget for key areas where it is possible to improve in and strategize how to get better in those areas.

A big way to be more prepared every month for all of your expenses is by breaking down all expenses into monthly amounts. Take a car registration expense of $252 a year. You divide this amount by 12 to get $21 per month.

$252 = Car Registration Yearly Expense

$252/12 = $21 Car Registration Monthly Expense

This means that if you set aside $21 every single month, then you will have saved up enough to pay for your car registration expense when it occurs once a year.

If you do this same kind of calculation for all of your expenses, you will be significantly more likely to be prepared for your expenses. Doing these calculations will also help keep you aware of where you are every month for your financial situation.

Decrease Property Taxes

Decreasing your property taxes can be another area where you can potentially save money. If your home’s value has decreased in the last year and it was not accurately accounted for on your tax assessment, then you could have room for decreasing the property tax.

First check your property tax bill to see if you are being accurately charged for the value of your house. You can usually check what an assessor has put down for your house by going to your local jurisdictions’s website.

This could help you see if there is an error that was put for your house such as extra bedrooms or more square footage than you have.

You can then check out similar properties in your area because the property tax bills are all available to the public. You should make sure that you are looking at houses in your tax classification.

This is because this will show you homes that are similar to yours. If it looks like your house is getting assessed as being more valuable than other properties in your area, then you could be eligible for an appeal to reduce your property taxes.

If you want to learn more about how to reduce your property taxes, check out How to Reduce Your Property Taxes.

Find the Best Mortgage Reducing Tips

Find the best mortgage reducing tips here that work best for you and consistently use them. Budget effectively for all your expenses to put yourself into the strongest financially responsible position.

If you can find a way to make extra payments, that is going to consistently break down the mortgage principal. In the long run doing this is going to save you tons of money that would have been spent paying extra interest.

I hope that you found helpful and valuable information on how to save money on mortgage that you can use.

If you have any questions, please leave them below and I will answer them to the best of my ability.

4 Replies to “How to Save Money on Mortgage – 8 Best Tips”

  1. Great article. I hope many more people find this and read it through. I owned a Mortgage Company for over a decade. One thing we always told our clients, was to make Bi-monthly payments. The average mortgage is around $250,000. By making Bi-monthly payments you can save around $75,000 on your mortgage. That’s huge!

  2. Hi Jesse and thanks for some great saving tips. I already knew some, but many new saving tips came up. I’ve often wondered that should begin to observe the grocery shopping. We are also very insured, maybe we could save there too.

    There are many other ways we can save in Finland. eg electric contract racing, switching to a cheaper heating mode or additional house insulation.

    Your tips will motivate me to watch for savings. Thanks Jesse!

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