For most people, a mortgage is the single biggest monthly expense in their budget. Whether you’ve just bought your first home or have been paying your loan for years, lowering your mortgage payments can free up hundreds of dollars each month—money you could use for savings, investments, or simply breathing easier.
Fortunately, there are several smart strategies you can use to cut these costs. Some involve big moves, like refinancing, while others are simple habits that add up over time. Here’s how to save money on your mortgage payments, both now and in the years ahead.
Consider Refinancing Your Mortgage
Refinancing is one of the most direct ways to reduce your monthly payments.
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How it works: You replace your existing mortgage with a new one—often with a lower interest rate or longer term.
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Why it helps: Lower rates mean smaller payments. Extending the term from, say, 15 years to 30 years also drops monthly costs (though you may pay more interest overall).
When rates are lower than when you first took out your mortgage, refinancing can save thousands over the life of your loan.
Before refinancing:
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Check your credit score—higher scores qualify for better rates.
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Shop around with multiple lenders to compare offers.
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Factor in closing costs to see if the savings are truly worth it.
Make Extra Payments When You Can
It might sound counterintuitive—paying more on your mortgage to save money. But making small additional payments reduces your principal faster, which means paying less interest over time.
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Pay a little extra each month, or make one additional full payment each year.
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Even adding $100 a month can shave years off your loan.
Many lenders allow you to specify that extra payments go directly toward the principal. Just be sure there are no prepayment penalties on your loan.
Drop Private Mortgage Insurance (PMI)
If you put down less than 20% when you bought your home, you’re probably paying PMI—a fee that protects the lender, not you.
How to save:
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Once you’ve paid down your mortgage enough that you owe less than 80% of the home’s value, you can usually request to remove PMI.
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Some lenders automatically drop it when you hit 78% loan-to-value (LTV).
If your home has increased in value significantly, you might reach that point faster. Sometimes paying for a new appraisal is worth it to eliminate PMI early.
Reassess Your Property Taxes
Property taxes are often built into your mortgage payment through an escrow account. If your tax assessment seems high:
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Look at the assessment carefully. Errors happen—like your home being listed with more square footage or features than it actually has.
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If something looks wrong, file an appeal with your local tax assessor’s office. Many homeowners win and see reduced taxes.
A successful appeal means lower escrow payments, which means a lower overall mortgage bill.
Get Quotes for Homeowners Insurance
Homeowners insurance is another cost typically bundled into your monthly payment.
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Shop around every couple of years to see if another reputable insurer offers a better rate.
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Increasing your deductible slightly can also lower premiums (just make sure you have savings to cover it in an emergency).
Reducing your insurance cost means your total mortgage payment drops, since less is collected for escrow.
Set Up Automatic Payments for Rate Discounts
Some lenders offer a small discount (such as 0.125%) if you set up automatic payments from a checking account. While modest, every bit helps—especially over a 30-year mortgage.
It also means fewer chances of missing a payment and incurring costly late fees.
Avoid Late Fees and Penalties
Speaking of fees—paying your mortgage late not only results in hefty charges, but it can also hurt your credit, making future borrowing more expensive.
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Set reminders or automate your payments to ensure you’re never late.
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Review statements to catch any mistakes early.
A flawless payment history also puts you in a strong position if you refinance later.
Consider a Biweekly Payment Plan
Instead of paying once a month, some homeowners opt to split their payment into two every month—say, half on the 1st and half on the 15th.
Why it helps:
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You end up making 26 half-payments a year, which equals 13 full payments—one extra each year without a huge upfront cost.
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This can cut years off your mortgage term and save thousands in interest.
Ask your lender if they support biweekly payments. If not, you can still do it manually by making one extra payment per year.
Maintain or Improve Your Credit Score
If you ever decide to refinance or take out a home equity loan, a higher credit score will qualify you for better rates.
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Pay bills on time.
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Keep credit card balances low relative to your limits.
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Avoid opening too many new accounts at once.
Better rates mean lower monthly payments and significant long-term savings.
Use Windfalls Wisely
Tax refunds, work bonuses, or other unexpected cash are tempting to spend on fun purchases. But applying even part of a windfall toward your mortgage can knock down the balance and reduce future interest costs.
You don’t have to sacrifice all enjoyment—just putting a portion toward your home loan makes a difference.
Your mortgage is likely your biggest monthly expense, but it doesn’t have to be a financial drain forever. By refinancing when rates are favorable, making extra payments, reassessing your escrow costs, and using every opportunity to chip away at the principal, you can save thousands over the life of your loan.
Start with a strategy that fits your current budget and lifestyle. Even small efforts add up—helping you build equity faster and achieve the freedom of being mortgage-free sooner.
