How To Save Money On Your Mortgage
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
How to Save Money on Your Mortgage
Overview
When seeking a mortgage, many homebuyers focus on obtaining the lowest monthly payment. However, it's crucial to consider the overall cost, including interest and fees over the long term. By examining these factors, you can save significantly over the years.
Even if you already have a mortgage, there are still strategies available to reduce the total interest paid. Most involve accelerating the loan repayment process, which lowers long-term interest costs.
Strategies to Reduce Mortgage Costs
1. Compare Offers
It’s wise to solicit offers from multiple lenders when searching for a mortgage. Rates can differ widely. Especially if your credit is not optimal, don’t settle for a high-interest rate without exploring better options.
2. Consider Fees
Fees and points added by lenders can significantly inflate mortgage costs. Review these carefully and challenge any that seem excessive. Use the annual percentage rate (APR), which combines the interest rate and fees, for a more accurate comparison.
3. Shorten the Term
If you plan to stay in your home for an extended period, opting for a shorter loan term can substantially reduce interest costs. Although this increases your monthly payments, it results in significant savings over the loan's lifespan. For instance, choosing a 15-year term at 5.75% over a 30-year term at 6% can save you $66,364 on a $100,000 mortgage.
4. Pay Bi-Weekly
Switching to bi-weekly mortgage payments instead of monthly ones can also reduce interest payments. This strategy leads to a more consistent decrease in principal, and because there are 26 bi-weekly periods in a year, you effectively make an extra payment annually, further reducing the principal.
5. Reduce PMI
If your down payment is under 20% of the home's price, you might need private mortgage insurance (PMI). Once your principal falls below 80% of the home's value, you can request your lender to cancel the PMI. This can occur after some principal reduction or if the home’s value appreciates rapidly. A reappraisal may be required, but the potential savings justify the expense.
For more tips on saving money on your mortgage, visit [LendingTree](http://www.lendingtree.com/cec/yourhome/yourmortgage/how-to-save-money-on-your-mortgage.asp).
You can find the original non-AI version of this article here: How To Save Money On Your Mortgage.
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