Debt reduction
None of this is expert advice. It's what people worked out for themselves, usually the hard way — what actually helped, and what they'd tell someone standing where you are. Take what fits and leave the rest.
If you only read a few
Choose a 30-year loan but budget for payments matching a 15-year schedule if you need emergency flexibility.
This lets you drop to the lower minimum if things go wrong, while still finishing the loan much sooner than 30 years.
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Park money intended for eventual mortgage payoff in a High-Yield Savings Account or Money Market Fund to earn interest until rates drop.
You can get 4-5% interest while waiting for better rates.
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Avoid advancing your payment due date to prevent late fees, as the bank may hold the funds without applying them to principal while you continue to accrue interest.
You end up paying more in interest to safeguard against a late payment.
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Do not expect automatic cancellation of PMI or MIP based on equity thresholds if you have a VA or FHA loan.
The Homeowners Protection Act does not apply to these loans.
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Send extra payments to escrow if it is underfunded to avoid lump-sum shortfalls.
This prevents having to pay a large lump sum when bills arrive and the escrow is short.
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Explicitly instruct your lender in writing to apply any extra mortgage payments directly to the principal balance.
Lenders may automatically apply extra funds to future interest, escrow accounts, or upcoming monthly payments instead of reducing the principal.
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- Verify that extra mortgage payments are applied directly to the principal.3
Budget for potential increases in escrow payments if a property tax reassessment occurs.
A new appraisal can raise taxes, increasing escrow costs.
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Pay your entire credit card balance every month.
This prevents you from having to pay any interest.
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Keep your monthly payment amount the same when switching to a shorter term to accelerate principal payoff.
More money goes toward principal each period, paying off the place faster.
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Use an early payoff calculator to find the specific extra amount needed for a target timeline and view potential interest savings.
It displays how much is saved by clearing the debt in X years rather than the original term.
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Apply a large principal payment and request the lender to recalculate your mortgage over the remaining term to lower monthly costs.
- Requires having a significant amount of cash.
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Log in monthly to make an extra principal-only payment manually.
This guarantees the payment is applied correctly rather than relying on automatic splitting.
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Continue paying the full pre-PMI removal amount after PMI is removed to accelerate principal reduction without changing your budget.
The extra amount goes directly to principal, reducing compound interest.
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Shop around for different homeowners insurance providers to lower costs when property taxes are fixed.
You cannot change property taxes, but insurance rates vary by provider.
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