Save Money on Your Mortgage

To cuts costs on your mortgage, you can take advantage of interest rate dynamics, how expenses and interest are calculated, and how long you make installments before paying off the entire mortgage balance.

Here are three of the best - and easiest - ways to save on mortgage loans:

1. Get the best deal on the mortgage rate and closing costs

Shop for the lowest interest rate you can qualify for, and negotiate with the lender to shave off as many closing costs as possible. If you plan to keep the loan for a long time and can save money by paying a fee for a lower rate-or "buying points"-then consider this option. If rates are expected to rise, avoid an adjustable rate loan in favor of a fixed rate.

2. Avoid private mortgage insurance (PMI)

By making a larger down payment, you can avoid PMI completely. But even if you don't, the lender's requirement for PMI will end once you've accumulated sufficient equity. Just keep track of your loan and ask the lender to drop the PMI as soon as it's no longer necessary.

3. Pay your mortgage bi-weekly

On a 30-year $200,000 mortgage loan at 6.5 percent interest, you'll pay $255,088 in interest. That $200,000 home will ultimately cost you a total of $455,088. But if you pay half of your monthly payment every two weeks-instead of all of it once per month-you'll save more than $60,000 in interest over the life of the loan. Some lenders charge an additional fee for enrolling you in a bi-weekly program, but the savings will more than justify the fee.

If you have self-discipline, you can do your own bi-monthly program without any fees or special mortgage company programs, simply by writing a check for half the monthly payment, every two weeks.

Discuss all your options with your lender before you lock in any mortgage loan, and always choose the terms and payment plans that best suit your particular needs and savings goals.