Five Clever Ways to Save Money on Your Mortgage

If you’re like most homeowners, your mortgage payment is the biggest item in your budget.

Have you ever thought about all of things you could do if you didn’t have to pay that monthly mortgage loan? Maybe you’ve always dreamt of taking a trip around the world or buying an iconic sports car. As amazing as that sounds, even more benefits await when you pay off your mortgage. You’ll also save on interest that would otherwise be given to the bank and you’ll own your home outright. With impressive perks like these to be had, why not get saving today?

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Here are five smart ways to pay down your mortgage faster and save thousands of dollars, too.

1. Make one extra mortgage payment each year.  If you have the means, the easiest way to save money on your mortgage is by making an annual extra payment. These additional payments are automatically applied on your principal, not the interest. Not only will your remaining balance drop, but you won’t have to pay interest each month on that principal for the remainder of the loan term. This technique works especially well if you get an annual bonus or receive a sizable income tax refund. Simply add the money to your next monthly payment to chip away at that principle ahead of schedule.
2. Round up your mortgage payment. Let’s say your mortgage amount is $1,813 per month. Why not pay $1,900 if you can? It may seem like a small amount but you can save a significant amount of interest on your loan over the course of 30 years. For example, if you pay just $50 extra each month on 30-year, $180,000 loan at 3.75% interest, you’ll save more than $13,000 over the life of the loan and pay off your mortgage three years sooner.
3. Refinance the original mortgage. If interest rates have dropped, and especially if your credit score has improved, you may be able to save thousands of dollars by refinancing your mortgage. This option allows you to pay off your existing loan and take out a new mortgage at better terms and can be an excellent way to go if you plan to remain in your home for a long time.
4. Recast your mortgage loan. In this scenario, you pay a lump sum toward the principal to reduce your principal balance, which reduces your overall monthly mortgage payment. Your monthly payment is then reset, based on the new, lower amount due. Your original interest rate and loan terms remain unchanged. Recasting is low cost, and no credit check or income verification is required. Lenders generally charge $200 or so for this service, but because it’s not considered a new loan, there are no closing costs.
5. Make a larger down payment. If you’re looking to buy a home but haven’t found the property of your dreams just yet, you may want to hold off until you have a hefty down payment in the bank. Saving for a big down payment can take some time, but the effort will pay off when it comes to your mortgage loan. First and foremost, you’ll be borrowing less, so the monthly loan amount will be smaller. And if you put down at least 20% of the price of the property, you won’t get stuck with pricey private mortgage insurance (PMI) premiums, which get tacked on to your monthly payment.

Before you start making any extra payments, it’s important to know the ground rules.

Check with your mortgage company first. Some companies only accept extra payments at specific times or charge prepayment penalties. And be sure to include a note with any extra payments indicating that you want the funds applied to the principal balance, not the following month’s payment.

Saving even a small amount on your monthly mortgage payment can make a big difference in your nest egg. The helpful professionals at Certified Title are here with valuable tools and information for all types of residential and commercial real estate transactions. To learn more, please contact our experienced team today.

About Certified Title Corporation: Since 1994, attorney-owned Certified Title Corporation has been furnishing residential and commercial real estate stakeholders across the nation with robust title insurance, settlement, and escrow services. Renowned for their industry-leading reliability and exemplary level of service and quality, the Maryland-based company helps clients from all walks of life achieve their asset goals. To learn more, call (888)486-5511 or visit https://www.certifiedtitlecorp.com/.