Buying a home or already locked into a mortgage? Either way, you might be paying more than you need to. Whether you’re looking for a lower interest rate or a smaller monthly payment, there are practical ways to save thousands over the life of your loan. Here are all the strategies you can use — both before you buy and after you own.
Before You Buy: Lock in the Best Mortgage Deal
Boost Your Credit Score
Your credit score is one of the biggest factors lenders use to decide your interest rate. The higher your score, the lower your rate.
To improve it:
See
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Pay down credit cards to under 30% of their limits
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Make all payments on time
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Avoid opening new accounts before applying for a mortgage
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Dispute any errors on your credit report
A 760+ score can help you qualify for the best rates. Even raising your score from 680 to 720 could shave off thousands in interest.
Boost Your Credit Overnight with These Insider Tips!
Unlock the Secret Mortgage Hacks Every First-Time Buyer Should Know!
Make a Bigger Down Payment
Putting down at least 20% doesn’t just help you avoid PMI (private mortgage insurance) — it also gets you better rates. Lenders see you as less risky, and you borrow less overall.
If you can't hit 20%, aim for at least 10% to reduce monthly PMI costs.
This Simple Trick Can Help You Save Thousands for Your First Home
Buy Down the Rate with Points
You can pay upfront to lower your mortgage rate using discount points. One point usually costs 1% of your loan and lowers the rate by around 0.25%.
Example: On a $400,000 loan, 1 point = $4,000. If it saves you $100/month, you break even in 40 months.
This is ideal if you plan to stay in the home for at least 3-5 years.
Choose a Shorter Loan Term
15-year mortgages usually come with lower interest rates than 30-year ones. You’ll pay more each month, but much less in interest over time.
Use a mortgage calculator to compare long-term savings. It can be worth it if your budget allows.
Shop Around for Lenders
Always get quotes from multiple lenders. Compare not just the interest rate, but also the APR (which includes fees). Even a 0.25% difference can add up.
Local banks, credit unions, and mortgage brokers often offer competitive rates.
Consider an ARM (Adjustable-Rate Mortgage)
ARMs offer a lower initial rate (e.g., fixed for 5, 7, or 10 years) before adjusting. If you know you won’t stay in the home long-term, this can save you money.
Just make sure you understand the cap structure and how high the rate could go after the initial term ends.
Use First-Time Buyer or Government Programs
FHA, VA, and USDA loans can offer lower rates and smaller down payments. Many local Houston-area programs also help with down payment assistance.
Are You Missing Out on Free Money? Top Home Buyer Grants Exposed! (UPDATED).
See if you're missing out on free money.
Add a Co-Borrower
If your credit or income is borderline, a co-borrower with good credit can help you qualify for a better loan.
Make sure both parties understand they are equally responsible for the mortgage.
Lower Your Debt-to-Income Ratio
Paying off other debts before applying for a mortgage improves your debt-to-income ratio (DTI). The lower your DTI, the better your loan options.
Lenders typically look for a DTI under 43%, but under 36% is ideal.
Look Into Job-Based Perks
Teachers, first responders, healthcare professionals, and veterans may qualify for special loan programs with reduced rates or fees.
Ask your lender or real estate agent (hi, that’s me!) to help you find what you qualify for.
Request to Pay Taxes and Insurance Directly
Most lenders escrow your taxes and insurance, but you may be able to opt out once you reach 20% equity. Paying these directly gives you more control and flexibility.
Some homeowners use this strategy to shop for better insurance rates and manage their own cash flow — potentially saving thousands over the years. Check with your lender to see if it's allowed under your loan terms.
After You Own: How to Reduce What You're Paying
Refinance to a Lower Rate
Refinancing is the most common way to lower your interest rate and monthly payment.
You might:
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Switch from a 30-year to a 15- or 20-year term
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Move from an ARM to a fixed-rate loan
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Eliminate PMI
Refinancing makes sense if you plan to stay in the home long enough to cover the closing costs (usually 2-5% of the loan).
Case Study: A Houston homeowner with a $350,000 loan refinanced from 6.75% to 5.9%, saving $270/month and $37,000 over the life of the loan.
Not sure if refinancing is right for you? Read this first.
Make a Lump Sum Payment
Another effective way to cut down your loan term and interest is by making a one-time lump sum payment toward your principal. Even a single extra payment of a few thousand dollars can shave months (or even years) off your mortgage.
See Cut Years Off Your Mortgage with One Simple Move to learn how it works.
Make Biweekly Payments
Instead of 12 monthly payments, make half-payments every two weeks. This adds one extra full payment per year.
Result: You pay off your loan faster and reduce interest.
Just confirm your lender accepts biweekly payments and applies them correctly.
Eliminate PMI
Once you have 20% equity, you can request PMI removal. Lenders aren’t required to remove it automatically until you reach 22%, so stay proactive.
Alternatively, refinance into a loan without PMI.
Request a Loan Modification or Rate Reduction
If you’re struggling financially or your rate is unusually high, ask your lender about a loan modification or interest rate reduction. These are more common with FHA, VA, or USDA loans.
Some lenders also offer streamlined refinance programs that require less paperwork.
Protest Your Property Taxes
If your assessed home value seems too high, don’t ignore it — challenge it. Every year, counties assign a market value to your home for property tax purposes, and it’s often higher than what the home would sell for. That inflated value means a bigger tax bill.
You have the legal right to protest this assessment. Start by gathering comparable sales in your area, photos of your home showing any needed repairs, and any documentation that supports a lower value. Most counties allow you to file online and provide evidence digitally.
A successful protest can result in a lower appraised value and significant tax savings each year. In some cases, this can translate to hundreds — even thousands — in annual savings.
Here's a full guide on How to Lower Your Property Tax in Texas
Consider a Cash-Out Refinance
If you have significant equity, you can refinance and pull cash out to pay off higher-interest debt. This could reduce your total monthly obligations.
Use caution: A higher loan balance or longer term can raise your interest costs.
Explore ways to reduce your property tax bill too.
Bottom Line: You Have Options
Lowering your mortgage costs isn’t just possible — it’s often easier than most people think. Whether you’re buying your first home or looking to adjust the one you’re in, the right strategy can save you tens of thousands over time.
Got questions about which option makes sense for your situation? Reach out to me, Raquel Refuerzo, and let’s walk through your options together.
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