If feasible for you, doing the following WILL save you thousands!
- Make an extra payment each year.
- On a 30 year fixed mortgage, by paying one extra payment a year, you cut off 5 years of payments AND save interest!
- The average US homeowner saves $50,000 on the term of their loan by following this tip.
- Trick yourself into making this extra payment by following the #2!
2. Bi-Weekly payments.
- Open an account just for your mortgage payment.
- Pick a day of the week to transfer ½ of your mortgage payment every two weeks (on a pay day)
- Set up mortgage on auto withdrawal.
- At the end of the year, you’ll already have this 13th payment ready to go!
3. Refinancing your loan.
- This tip takes more effort and more money upfront.
- Be prepared to pay closing costs (3% of loan on average)
- Only works if you get a lower interest rate!
Example : if you have a 30-year, 6% interest on $200,000 your total cost of mortgage would be $431,676. If you refinance at 5% on the same $200,000 your total cost of mortgage would only be $386,512. This would save you $45,176!