Your mortgage is likely your biggest monthly expense, sometimes consuming 25-35% of your gross income. But what if you could significantly reduce that burden? The truth is, there are numerous strategies available right now to help you save money on mortgage payments and interest costs. Whether you’re just starting your homebuying journey or already have a loan in place, these practical, research-backed tactics can put thousands of dollars back in your pocket.
In this comprehensive guide, we’ll explore 15 evidence-based strategies on how to save money on mortgage while building equity faster and achieving financial freedom sooner.
Before we move further, here is a comprehensive guide to What Is a Mortgage? Complete Beginner’s Guide for First-Time Buyers in the USA
Understanding What You Can Control
Before diving into specific strategies, understand that your mortgage payment breaks down into four components (PITI):
- Principal – Money going toward owning your home
- Interest – The cost of borrowing money
- Taxes – Property taxes held in escrow
- Insurance – Homeowners and mortgage insurance
Most ‘how to save money on mortgage’ strategies target one or more of these components. Let’s explore how.
PART 1: Strategies Before You Buy (Pre-Mortgage)
1. Shop Around with Multiple Lenders to Save Money on Mortgage
Potential savings: $44,000 over 30 years
This single strategy might be the most impactful. According to Realtor.com analysis of 2 million mortgage records, buyers who shop multiple lenders achieve interest rates 0.55% lower than average. On a $425,000 home purchase, this translates to approximately $44,000 in lifetime savings.
How to implement:
- Get loan estimates from at least 5-7 different lenders
- Compare Annual Percentage Rates (APR), not just interest rates
- Look beyond your current bank-credit unions often offer competitive rates
- Don’t let multiple inquiries hurt your credit (mortgage inquiries within 45 days count as one inquiry)
Real example: A borrower with a 30-year, $350,000 mortgage at 6.25% pays approximately $383,800 in interest. That same loan at 5.75% (0.5% lower from shopping lenders) costs approximately $350,000 in interest, a savings of $33,800.
2. Improve Your Credit Score Before Applying
Potential savings: $8,700+ over 30 years
Your credit score directly impacts your interest rate. Moving from a 660-720 credit score to a 720-760 range could save you approximately 0.11% in interest—translating to roughly $8,700 in savings over a 30-year mortgage.
How to improve your credit:
- Pay all bills on time (35% of your score)
- Reduce credit card balances below 30% of limits (30% of your score)
- Keep old accounts open to maintain credit history length (15% of your score)
- Avoid opening new credit accounts before mortgage application
- Check credit reports for errors at annualcreditreport.com
Also Read: Fixed vs. Adjustable-Rate Mortgage: Which One Should You Choose in 2026?
3. Increase Your Down Payment to Avoid PMI
Potential savings: $100,000+ over 30 years
Private Mortgage Insurance (PMI) protects the lender when you put down less than 20%. It costs $30-$70 per $100,000 borrowed monthly. By saving for a 20% down payment instead of 10%, you eliminate PMI entirely and could save over $100,000 over your loan’s lifetime.
How to save effectively:
- Use automated transfers to a high-yield savings account (currently 4-5% APY)
- Consider first-time homebuyer down payment assistance programs (up to $50,000 in some states)
- Use tax refunds, bonuses, and windfalls toward down payment savings
PART 2: Strategies at Closing to Save Money on Mortgage
4. Negotiate Your Interest Rate and Fees
Potential savings: $5,000-$15,000
Many borrowers accept their initial rate quote without negotiation. However, lenders have flexibility on rates and fees.
Negotiation tactics:
- Get multiple loan estimates and bring them to your chosen lender
- Ask: “Can you match or beat this rate?”
- Negotiate the origination fee (can be 1% of purchase price)
- Ask about discount points—paying upfront to reduce your rate
- Request waiver of application or credit report fees
Important: Don’t feel pressured. Good lenders welcome competitive shopping and actively work to retain your business.
5. Consider Buying Mortgage Points (Discount Points)
When it makes sense: Holding the home 5+ years
One mortgage point costs 1% of your loan amount and typically reduces your interest rate by 0.25%. This works if you’ll stay in the home long enough to recoup the cost through lower payments.
Example calculation:
- Loan amount: $350,000
- One point costs: $3,500
- Saves approximately: $50/month in interest and principal
- Break-even point: 70 months (nearly 6 years)
- Recommendation: Buy points if you’ll stay 6+ years
Also read: 10 Proven Ways to Lower Your Closing Costs (Save $3,000+ on Your Home Purchase)
6. Request Loan Estimate Comparisons and Ask About Discounts
Potential savings: $2,000-$5,000
By federal law, lenders must provide a detailed Loan Estimate within 3 days of application. Use this to negotiate:
- Title insurance discounts (often negotiable by 5-10%)
- Attorney fees (can vary $500-$1,500 between lenders)
- Appraisal fees (sometimes waived or reduced)
- Document preparation fees
PART 3: Strategies After You Have a Mortgage to Save Money on Mortgage
7. Make Biweekly Payments (The Accelerated Payment Strategy)
Potential savings: $85,000+ in interest and 5+ years off your loan
This is one of the simplest yet most effective strategies. Instead of one monthly payment, pay half your payment every two weeks.
How it works mathematically:
- 52 weeks per year ÷ 2 = 26 half-payments
- 26 half-payments = 13 full payments annually
- Result: One extra full payment every year
Real example:
- $350,000 mortgage at 6% for 30 years
- Standard monthly payment: $2,099
- Biweekly payment: $1,050 every 2 weeks
- Outcome: Pay off in 24.5 years instead of 30 years, saving $85,000+ in interest
Important: Confirm your lender doesn’t charge fees for biweekly payments.
8. Make One Extra Full Payment Annually
Potential savings: $45,000+ in interest over 30 years
You don’t need to restructure your entire payment plan. Simply make one additional full payment per year.
Three simple methods:
Method A – Windfalls: Apply tax refunds, bonuses, or gifts directly to your mortgage principal
Method B – Monthly additions: Divide your monthly payment by 12, then add that amount to each regular payment. At year’s end, you’ve made one extra payment
Method C – Round-up payments: Instead of paying $2,099, pay $2,200. The extra $101 monthly equals ~$1,212 annually, nearly one extra payment
Real impact:
- Two extra payments per year on a $350,000 mortgage at 6%:
- Payoff time: 24 years vs. 30 years (6-year reduction)
- Interest saved: Approximately $45,922
9. Remove Private Mortgage Insurance (PMI) Early
Potential savings: $30-$70 per month per $100,000 borrowed
Once you reach 20% equity, you can request PMI removal. Many homeowners continue paying PMI years after becoming eligible.
Three ways to remove PMI:
Option 1 – Reach 20% equity naturally:
- Build equity through regular payments
- Automatically removed at 22% equity (78% loan-to-value)
- Takes 5-10 years depending on your rate
Option 2 – Get a home appraisal (if property appreciated):
- If your home value increased since purchase, you might have 20% equity already
- Order professional appraisal ($300-$500)
- Request PMI removal based on new valuation
Option 3 – Refinance:
- If rates are favorable or your credit improved, refinance into a new loan
- New loan can exclude PMI if you’ve built 20% equity
- Refinancing costs $3,000-$6,000 but might be worth it
Example of equity acceleration:
A homebuyer with a $350,000 purchase at 10% down ($35,000) and $315,000 mortgage can make principal-only payments to reach 20% equity faster. Each extra $200 monthly payment toward principal accelerates PMI removal by 1-2 months.
Also Read: 7 Genius Ways to Save Money on Mortgage in 2026 (Without Refinancing!)
10. Appeal Your Property Taxes to Reduce PITI Payments
Potential savings: $539+ annually (40-60% success rate)
Between 30-60% of US properties are over-assessed. If your property tax component of your mortgage is inflated, appealing could lower your monthly PITI significantly. This is one of the most popular ‘how to save money on mortgage’ starategies.
How to appeal:
Step 1 – Verify your assessment
- Request your property assessment from your county/city assessor
- Check for errors: incorrect square footage, wrong number of bathrooms, old roof age listed as new
Step 2 – Research comparable sales
- Review recent sales of similar homes in your neighborhood
- Tax records are public—compare your assessment to neighbors’
Step 3 – File within your deadline
- Deadlines typically range 30-45 days from assessment notice
- Filing has zero risk—denied appeals change nothing
Success rate and savings:
- 40-60% of appeals succeed
- Average annual savings: $539
- Savings typically apply multiple years, compounding your savings
On a $350,000 home with annual property taxes of $5,000, even a 10% reduction ($500) lowers your monthly PITI by ~$42.
11. Refinance to a Lower Interest Rate
Potential savings: $5,000-$100,000+ depending on rate drop
When market rates drop 0.5-1% below your current rate, refinancing becomes attractive. If you have been searching for how to save money on mortgage, refinancing is a solid option.
Break-even calculation:
- Refinancing costs: $3,000-$6,000 in closing costs
- Monthly savings from lower rate: Calculate at Bankrate Mortgage Calculator
- Break-even months: Closing costs ÷ monthly savings
- Refinance if: You’ll stay in home longer than break-even period
Example:
- Current loan: $300,000 at 7.0% (payment: ~$1,996)
- Refinance offer: $300,000 at 6.0% (payment: ~$1,799)
- Monthly savings: $197
- Break-even: $5,000 ÷ $197 = 25 months (~2 years)
- Recommendation: Refinance if staying 2+ more years
Also Read: Stop Overpaying Interest: 3 Smart Tips to Pay Off Your Mortgage Faster
12. Consider Mortgage Recasting (Overlooked Strategy)
Potential savings: $250-$500 in fees vs. $3,000-$6,000 for refinancing
Recasting is the lesser-known cousin of refinancing. You make a large principal payment ($10,000+), and your lender recalculates your monthly payment based on the new, lower balance.
Key differences from refinancing:
- Keep your existing interest rate
- No credit check required
- No appraisal needed
- Costs only $250-$500
- Takes weeks, not months
When to use recasting:
- You received an inheritance or large bonus
- Expecting a home sale from another property
- You have good equity but want lower payments
- Current rates aren’t better than yours
Example:
- Current mortgage: $250,000 remaining at 6% interest
- Lump-sum payment: $40,000
- New balance: $210,000
- New monthly payment: ~$150 less (over remaining loan term)
13. Refinance to a Shorter Loan Term
Potential savings: $100,000+ in total interest
Refinancing from a 30-year to a 15-year mortgage accelerates equity building and dramatically reduces total interest.
15-year vs. 30-year comparison:
| Metric | 30-Year at 6% | 15-Year at 5.5% |
| Monthly Payment | $1,799 | $2,450 |
| Total Interest | $348,000 | $124,000 |
| Interest Savings | — | $224,000 |
| Payoff Time | 30 years | 15 years |
When this works:
- Income has increased since original mortgage
- Confident you’ll stay in home 10+ years
- Can comfortably handle higher monthly payment
Also Read: 7 Financial Tips for Young Adults from Walmart’s Sam Walton (That Can Transform Your Money Game)
PART 4: Advanced Strategies to Save Money on Mortgage
14. Shop for Homeowners Insurance Annually
Potential savings: $200-$600 annually ($25-$50/month)
Insurance is part of your PITI payment. Shopping annually for better rates directly reduces your mortgage payment.
Savings tactics:
- Get quotes from at least 3 different insurers
- Bundle home and auto insurance (15-25% discount)
- Ask about safety feature discounts (fire extinguishers, security systems)
- Increase deductible if you have emergency fund
- Review claims history annually—3+ claims-free years = discount
15. Make Principal-Only Extra Payments
Potential savings: Custom based on payment amount
Any extra money toward your mortgage should explicitly go to principal, not toward future installments.
How to do it correctly:
- Write “principal payment” on the check
- Call your lender to confirm application
- Request written confirmation
- Track in your amortization spreadsheet
Impact example:
Adding just $150/month to principal on a $350,000 mortgage at 6%:
- Shortens loan by approximately 2 years
- Saves approximately $28,000 in interest
- Builds equity 24% faster in first 5 years
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Quick Reference: How to Save Money on Mortgage Strategies by Situation
| Your Situation | Best Strategies | Potential Savings |
| About to buy | Shop lenders, improve credit, save for 20% down, buy points | $44,000-$100,000+ |
| Just closed | Appeal property taxes, eliminate PMI early | $539-$2,000+/year |
| Rates fell | Refinance or recast | $5,000-$100,000+ |
| Got a bonus/windfall | Lump-sum principal payment or recast | $10,000-$50,000+ |
| Want faster payoff | Biweekly payments, shorter term refinance | $45,000-$224,000+ |
| Tight monthly budget | Remove PMI, shop insurance, appeal taxes | $200-$70/month reduction |
The Bottom Line on How to Save Money on Mortgage
Saving money on mortgage isn’t complicated—it requires awareness and action. Whether you’re pre-purchase or already mortgaged, opportunities exist to reduce your burden significantly.
The most impactful strategies:
- Shop multiple lenders (biggest impact: $44,000+)
- Make biweekly payments (easiest to implement: $85,000+ savings)
- Remove PMI early (quickest ongoing reduction: $30-$70/month)
- Refinance strategically (conditional on rates: $5,000-$100,000+)
Even combining several modest strategies, shopping lenders (0.5% savings), biweekly payments ($85,000 interest savings), and PMI removal ($30,000+ impact), could save you over $100,000 over your mortgage’s lifetime.
Your financial future is shaped by small, consistent actions taken today. Start with strategies matching your situation, and you’ll be well on your way to achieving your true financial potential.
FAQ: Common Questions on How to Save Money on Mortgage
Q1: How much can I realistically save by shopping mortgage lenders?
According to Realtor.com analysis of 2 million mortgages, shopping rates typically saves 0.55% interest, worth approximately $44,000 over 30 years on a $425,000 home. Some borrowers find even better rates by shopping harder.
Q2: Is making biweekly payments painful to manage?
Not if your paycheck schedule aligns. If you receive paychecks every two weeks, biweekly mortgage payments align naturally with your income, making the adjustment painless. Many employers can split your direct deposit for automatic withdrawal.
Q3: Should I refinance if rates dropped 0.25%?
Only if you’ll stay in your home longer than the break-even period. With $5,000 in refinancing costs, you need at least 2-3 years of $100+ monthly savings to justify refinancing. Lower rate drops are borderline.
Q4: Can I remove PMI before reaching 20% equity?
No. Federal law requires 20% equity (80% loan-to-value) to request PMI removal. However, if your home appreciated significantly, a new appraisal might prove you already have 20% equity.
Q5: What’s the fastest way to save money on my mortgage?
The fastest way for those with means is recasting (make large principal payment and recast)—this immediately lowers your monthly payment with minimal cost and hassle. For monthly savers, biweekly payments provide consistent, automatic savings.
Q6: Is it better to save money on mortgage or invest the difference?
This depends on your investment returns vs. mortgage rate. A 6% mortgage guarantees 6% “return” on extra principal payments (by avoiding interest), while stock market returns are uncertain. Conservative approach: prioritize mortgage savings if rate is above 6%.
Q7: Does extra mortgage payments hurt my credit score?
No. Paying extra doesn’t directly impact your score. However, maintaining a consistent payment history (automatically improved by extra payments) helps your credit long-term.
Q8: Can I split a biweekly payment if my lender charges fees?
Yes. Make two equal extra payments monthly instead of restructuring your entire payment schedule. This provides similar benefits (slightly more than one extra annual payment) without biweekly fee hassles.
Q9: What if I lose my job? Can I stop extra payments?
Yes. Extra payments are optional. If you lose income, you can temporarily stop extra payments while maintaining your regular mortgage payment. This flexibility is another advantage of biweekly/extra payments.
Q10: How do I know if I should refinance or recast?
Refinance if:
- Interest rates are 0.5%+ lower than your rate
- Your credit score improved significantly
- Closing costs are justified by lifetime savings
Recast if:
- You have a windfall but like your current rate
- Rates aren’t better than yours
- You want to avoid refinancing paperwork
