Saving money on your mortgage may involve a little homework up front but it can payoff big time down the road. Combining bi-weekly mortgage payments with a lump sum payment yearly is a powerful strategy to know years off your mortgage and save thousands of dollars in interest payments over the life of a typical conventional 30 year mortgage.
Ready to take the plunge and save money on your mortgage? With mortgage rates at historic lows there is no better time to get started than right now!
Clean Up Your Balance Sheet
The first step should be to get your financial house in order, pardon the phrase! If you are going to ask banks to loan you money you had better be able to show them you are a good risk. More importantly, the better your balance sheet the more favorably the loan terms will be. Start at least a year or two in advance by pulling a credit report, fixing any errors, making payments on time, and paying down as much outstanding debt as possible.
Compare Mortgage Rates
This step can be a pain but ultimately will benefit you with the best possible terms for your current financial situation. There are many websites and mortgage brokers out there that can help you compare loan packages. Make a spreadsheet to keep track of loan terms and mortgage contact information to make your final decision easier.
Making bi-weekly payments is a smart idea because it allows you to take advantage of the fact that there are 52 weeks in a year which means you will make an extra mortgage payment each year. That's a saving of almost $20,000 over the life of your loan!
By taking a few simple measures like the ones mentioned above, you can knock of years of mortgage payments and save thousands!