Your home is likely the biggest purchase you will ever make. In fact, it’s so big that you will probably need a loan to make it happen. A mortgage is a huge commitment in terms of money, and by the time you repay your loan, the interest charges that come with it will make your home purchase even more expensive.

It’s not necessary to accept all the costs, however. With a little planning and effort you can employ the following strategies to save money on your mortgage:

1. Cultivate Good Credit

Good Mortgage CreditBecause the interest rate on your mortgage is so influential when it comes to your total cost, it’s important to get the smallest rate possible. If you want a low interest rate, you need good credit. Make it a point to build a good credit history and a high credit score. With a high credit score, you will have a better chance at a lower rate — and a less expensive mortgage over time.

You can improve your credit score by making your payments on time and in full, by limiting the amount of debt you carry (especially on credit cards), and by engaging in responsible financial habits.

2. Save Up for a Down Payment

The less you borrow, the lower your overall cost when it comes to your mortgage. Save up for a down payment so that you don’t have to borrow as much. The recommendation is still a 20 percent down payment, but even if you save up 10 percent, it’s still better than getting a zero-down mortgage or only paying the minimum down payment to qualify for an FHA loan.

Plus, if you can save up for a 20 percent down payment, you’ll avoid the added cost of private mortgage insurance.

3. Choose a Shorter Loan Term

Often, you can enjoy a lower interest rate when you agree to a shorter loan term. If you choose a 15-year mortgage or a 20-year mortgage, you might be eligible for a lower interest rate, saving you money.

On top of that, the shorter your term, the lower your overall cost. With a 15-year mortgage, you can save tens of thousands of dollars over a 30-year mortgage. You do have to be prepared for a higher monthly payment, however. But some consumers find that the higher monthly payment is worth the cost.

4. Pay Off Your Mortgage Early

Save Money on Your MortgageYou can also save money by paying off your mortgage early. If you aren’t comfortable with the idea of locking in a higher monthly payment, you can make extra payments to reduce your term. Before you start this process, though, make sure that your agreement doesn’t come with a prepayment penalty. Many homeowners choose to get a 30-year loan, but make extra payments so that the loan is paid off in 15 years.

One of the easiest ways to arrange for early pay off is to make biweekly mortgage payments. With biweekly payments, you make the equivalent of one extra monthly payment each year. This can lead to savings as you pay off your mortgage a few years early.

No matter how you do it, paying off your mortgage early can lead to significant interest savings.

5. Take Advantage of the Mortgage Interest Tax Deduction

If you itemize your taxes, you can take advantage of the mortgage interest tax deduction. There is also a tax deduction for the amount you pay in property taxes. It doesn’t make sense for everyone to itemize, though, so make sure that you consult with a tax or financial professional to see if you can benefit. Itemizing and taking the mortgage interest tax deduction can offset some of the costs associated with your mortgage over time.

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