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How to Save Thousands of Dollars on Your Home Mortgage

Overview

There are plenty of ways for homeowners to save thousands and thousands of dollars over the course of their mortgage. While money is often tight, with careful financial planning most homeowners can start reducing their mortgage debt today, saving them money in interest down the road. The total amount of interest paid on a 15- or 30-year mortgage is normally more than the principal paid on the loan.

Do your research and learn how to reduce your mortgage debt.

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Step 1

Review your current mortgage including the interest rate, principal and remaining months on your loan. If you don't currently own a home, estimate your loan amount and interest rate that you are considering. Before a homeowner can save thousands of dollars on a home mortgage, he needs to understand his current finances. Finding this information is a critical step in figuring out where money can be saved overall.
Step 2

Leverage online mortgage calculators by using data from your current home loan. Be sure to find a free monthly mortgage payment calculator that includes an amortization schedule. This feature will allow you to plug in your current mortgage information as well as what-if scenarios using different interest rates and terms. Search around for a calculator that you feel comfortable using that provides this helpful information.
Step 3

Calculate your potential mortgage payment using the online calculator by making one extra payment per year. For example, if your monthly mortgage is $1,200, then divide this number by 12 and add the extra amount to your payment. In this example, you would add $100 to each monthly payment which would equal $1,300. This extra little monthly payment will actually save thousands and thousands of dollars over a 15- or 30-year mortgage.
Step 4

Check your personal budget and make sure your extra monthly payment can be supported. While it is nice to be able to pay extra on your mortgage, the homeowner must make sure this amount is sustainable. Making extra monthly payments will save thousands of dollars on your mortgage, but is not worth it if it causes more immediate financial hardships.
Step 5

Take action and begin making extra payments based on your calculations. As long as adding the extra monthly payments to the mortgage payment is sustainable, begin making the extra payments immediately. Remember that for every month you miss paying extra on your mortgage, you miss saving thousands of dollars. Even if you can't afford the full amount on the calculated extra payment, a few dollars will still save you a lot of money over the life of the loan.

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Consider refinancing your mortgage to a lower rate which can save thousands of dollars in interest. Look into bi-monthly or bi-weekly mortgage payments to save additional money.
Consider refinancing your mortgage to a lower rate which can save thousands of dollars in interest.
Look into bi-monthly or bi-weekly mortgage payments to save additional money.
Be careful of hidden fees or early payoff fees that may be required to payoff a mortgage early.
Be careful of hidden fees or early payoff fees that may be required to payoff a mortgage early.