How to Save $100,000 on Your Mortgage: 7 Proven Strategies

The average American pays over $300,000 in interest on a 30-year mortgage. But with smart strategies, you can significantly reduce this burden and potentially save $100,000 or more over the life of your loan.

1. Make Extra Principal Payments

Adding just $100 extra to your monthly payment can save you tens of thousands in interest. Here's why it works:

• • Extra payments go directly toward principal
• • Less principal means less interest calculated each month
• • You'll pay off your loan years earlier

2. Refinance When Rates Drop

Refinancing can lower your interest rate, reduce monthly payments, or help you pay off your loan faster. Consider refinancing when:

• • Current rates are 0.5% or more below your rate
• • You plan to stay in your home for several more years
• • Your credit score has improved significantly
• • You want to switch from ARM to fixed-rate

3. Switch to a 15-Year Mortgage

While monthly payments are higher, 15-year mortgages offer significant savings:

• • Lower interest rates (typically 0.5-1% less than 30-year)
• • Build equity much faster
• • Save hundreds of thousands in total interest

4. Remove PMI as Soon as Possible

Private Mortgage Insurance (PMI) typically costs 0.5-1% of your loan amount annually. You can remove it by:

• • Reaching 20% equity through payments or home appreciation
• • Getting a new appraisal to prove your home's value
• • Making extra payments to reach the 20% threshold faster

5. Shop Around for Better Rates

Don't accept the first offer. Even a 0.25% difference in interest rate can save thousands:

• • Get quotes from at least 3-5 lenders
• • Compare APR, not just interest rates
• • Consider online lenders and credit unions
• • Negotiate fees and closing costs

6. Make Bi-Weekly Payments

Instead of 12 monthly payments, make 26 bi-weekly payments (half your monthly amount). This results in 13 full payments per year, significantly reducing your loan term and interest paid.

7. Use Windfalls Wisely

Apply tax refunds, bonuses, or inheritance directly to your mortgage principal. These lump-sum payments can have an enormous impact on your total interest paid.

The Bottom Line

Saving $100,000 on your mortgage isn't just possible—it's achievable with the right strategy. Start with one or two of these methods and gradually implement others as your financial situation allows. Remember, even small changes can lead to significant savings over time.