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12 • A Good Money Manager
Plays for Smart Mortgaging

If you have the money, pay a high down payment on your mortgage. For many people, buying a home is the most costly and significant payment they'll ever make in their lives. For this reason, it helps to be in the know how to spend your mortgage money wisely. Your goal in paying off your mortgage should be to minimize interest payments and fees while balancing out the rest of your budget.

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  • Talk with your lender about refinancing. If you can refinance your loan down from 6.7% to 5.7%, for example, while still continuing to make the same payments, go for it. That will be thousands of dollars savings every year so you could knock years off your mortgage repayment.
  • See if you can't make bi-weekly payments instead of monthly payments. Instead of making 12 payments on your mortgage in a year, see if you can't make 26 payments on your mortgage instead. This will allow you to save thousands of dollars, provided there aren't any fees associated with it. Some lenders charge significant fees ($300 to $400) in order to give you the privilege, and even then only apply the payment once a month.
  • Prepay early up front. The first five to seven years of a mortgage are generally when your interest payments are going to be the highest. If you can, take your tax return and funnel a portion of it back into your mortgage during these years. Paying off early will help increase your equity fast by substantially lowering your interest payments.

When you can manage your money, You will have Great Credit!