5 Proven Strategies to Reduce Your Mortgage Loan Interest Burden

If you're a homeowner with a mortgage loan, then you know how frustrating it can be when you start calculating the total cost of your mortgage loan. The amount you end up paying for your mortgage loan is determined by the interest rate. Unfortunately, interest rates can often hike up the cost of a mortgage loan. But there's no need to worry because we've got you covered. Listed below are 5 proven strategies to reduce your mortgage loan interest burden.

1. Refinance Your Mortgage

One of the most effective ways to reduce the interest rate on your mortgage loan is to refinance your mortgage. Refinancing allows you to renegotiate the terms and conditions of your mortgage loan with your lender. This means that you may be able to reduce your monthly payments, the length of your loan, and most importantly, the interest rate.

2. Make Bi-Weekly Payments

Another way to reduce your mortgage loan interest burden is to make bi-weekly payments. Instead of making monthly payments, divide your payments into two and pay half of the monthly payment bi-weekly. This method will result in you making extra payments, which directly goes towards reducing the principal amount and decreasing the total interest paid.

3. Add Extra Payments

There's no harm in making extra payments. Making lump-sum payments on your mortgage loan can help reduce the total interest paid. To achieve this goal, make sure the extra payment is going towards the principal amount of the loan instead of the interest.

4. Work Towards a Higher Credit Score

Your credit score plays an essential role in determining the interest rate applied to your mortgage loan. If your credit score is low, then the lender will consider you a high-risk borrower which results in a higher interest rate. To reduce your mortgage loan interest burden, work on improving your credit score by paying off debts, avoiding late payments and monitoring your credit report regularly.

5. Opt for a Shorter Loan Term

Lastly, opt for a shorter loan term if possible. A shorter loan term translates into a higher monthly payment but with a lower interest rate. A shorter loan term also means more equity in your home, which can be a source of future funds.

Conclusion

Reducing your mortgage loan interest burden can be achieved through multiple strategies. Consider refinancing your mortgage, making bi-weekly payments, adding extra payments, working towards a higher credit score and opting for a shorter loan term. By implementing these strategies, you'll be able to decrease your total cost of borrowing, which can result in better financial stability and peace of mind.

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