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How to save money on your mortgage. 10 life hacks

1.5-2 thousand dollars — this is the average monthly cost of a mortgage loan in the United States. In general, this is one of the largest items of expenditure and of course I would like it to be smaller. We won’t even ask if you’ve thought about reducing your bill payments — it’s obvious enough. Everyone wants it, regardless of income level and credit check. So how to save money on your mortgage? Catch useful life hacks.

Life hack №1: Get rid of PMI insurance

Private mortgage insurance, or PMI, is insurance that protects the lender in the event that you default on your loan. PMI is required if you have a regular loan and make a down payment of less than 20 percent of the value of the home.

However, even if you have made a small down payment, there are several ways to get rid of PMI. One way is to simply make additional mortgage payments until you hit the 20 percent mark in your net worth.

For example, you can contact your lender and ask them to cancel your PMI insurance. If you don’t know how much your home is worth right now, you can get a home appraisal. It’s even available just online.

Another option is to refinance into a different type of mortgage. For example, you can refinance an FHA loan into a regular loan once you have earned enough net worth.

In general, if you are tired of paying for PMI, consider getting rid of it.

Life hack №2. Make payments every two weeks, not monthly

Monthly payment is the base for many. This is what most people are used to doing. But what if we change this practice? Yes, and pay for the house even faster.

If you make bi-weekly payments instead of monthly, you will end up making 26 payments each year instead of 12 full payments. This can cut your mortgage by several years and save thousands of dollars in interest payments.

In addition, biweekly payments help to reduce the overall debt burden. They make it easier to qualify for a home loan or line of credit in the future. So you will not only save money, but also improve your financial situation.

Life hack №3. Refinance the loan for a shorter period

Everyone around is talking about refinancing for a reason. It really helps save a lot of money. Although at first it may seem illogical step. After all, shorter loan terms usually mean higher monthly payments – but you’ll save a ton of money in interest in the long run.

If you can increase your monthly payments, you can get out of your mortgage faster. Alternatively, you can also pay more each month instead of refinancing and ‘shortening’ the term yourself.

Life hack №4: Refinance at a lower interest rate

This is an option in case you are more focused on saving money monthly. As opposed to the long term with interest. If you can’t negotiate a lower interest rate with your lender, simply try refinancing at a lower interest rate with another lender. This is especially true if rates have dropped since you originally got the loan.

Another option is also possible. For example, you have lived in a house for several years and have accumulated capital – find out how things are with current rates. All of a sudden, they have gone down since you bought the property (which is most likely what happened). Be sure to compare the cost of refinancing with the amount of money you’ll save on monthly payments before making a decision.

Use the mortgage calculator on our website to find out how much you could save by refinancing.

Life hack №5: Get rid of escrow accounts

Escrow accounts are a guarantee that homeowners have enough money to pay property taxes and insurance premiums. However, these bills can also add hundreds of dollars to the cost of a mortgage every year.

Fortunately, there is a way to get rid of the bill. Just make your own budget for taxes and insurance, and then pay yourself. Of course, this may require additional effort on your part, but it can save a significant amount of money in the long run. Just be disciplined in your budget to keep up with payments.

Life hack №6: Make Extra Payments When You Can

Have you got extra money, increased income, have you found a new high-paying job? It is better to invest these bonuses in additional mortgage payments. Even a small amount can help reduce the principal balance and save money on interest over the life of the loan.

Keep in mind that you should always have cash on hand in case of an emergency. So make sure you have them before making a payment. In the desire to pay off the mortgage, the main thing is not to overdo it.

Life hack №7. Pay attention to the repayment schedule of your loan

Amortization is the process of distributing a loan into equal payments over a set period of time. Most mortgages amortize over 30 years. This means that each monthly payment includes both principal and interest. However, the ratio of principal to interest changes over time.

In the early years of a mortgage, most of each payment goes towards paying interest. However, as the balance of the loan decreases, more and more of each payment goes towards repaying the principal.

We advise you to carefully monitor the amortization schedule and make additional payments on the principal amount when possible.

Life hack №8: Negotiate a lower interest rate with your lender

Don’t be afraid to take the initiative and negotiate — if you’re really want to know how to save money on your mortgage. 

One way to do this is to compare the interest rates of different lenders. By shopping and getting quotes from multiple sources, you can negotiate to be offered a lower rate.

Another tactic is to issue a floating option. It will allow you to lock in a lower rate. In case rates drop before you close your loan. While it may take some time and effort, negotiating a lower interest rate will save you thousands of dollars over the life of the loan. Even a small rate cut will be helpful.

Life hack №9: Consider an adjustable-rate mortgage

An adjustable rate mortgage (ARM) has a low starting interest rate that typically lasts five or seven years (sometimes more). After that, the rate is adjusted depending on market conditions. If the interest goes up, your payments will go up. But if rates come down, you save money.

Just make sure you understand how ARM works before subscribing to them. And think about whether the idea of increasing payments in the future suits you.

Life hack №10. Live in your own investment property

Another way to speed up a mortgage loan is to buy a house with potential investment income. This strategy, also called ‘house hacking’, can give you extra money. You can use them to pay off your mortgage or even free living.

For example, imagine that you bought a four-unit house as your first real estate investment. But you live in one apartment, and rent out the other three. Tenant income allows you to make monthly mortgage payments in addition to any maintenance payments. Thus, you can live there completely free of charge.


If you want to save money on a mortgage, there is always a way. In addition, you now have some good life hacks. And also – the opportunity to ask a question directly to us. Sign up for a free consultation at LBC Mortgage. We will select individual refinancing or saving options for you, and we will also make the mortgage world simple and understandable for you. And of course we will answer the main question — how to save money on your mortgage.

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