Save With Dave

Save With Dave: Saving On Your Mortgage

SACRAMENTO (CBS13) ― Thanks to all that interest, by the time your mortgage is paid off, you'll likely have paid at least double the original loan amount. Here's a way to save tens of thousands of dollars on that loan.

If you can scrape together one extra mortgage payment a year you'll pay off your loan early and save big bucks in the long-run. But this strategy might not be for everyone.

"The people id say would benefit the most are people who's goal is to pay off the loan. They're in the home they're going to live in for the rest of their life," said Jennifer Newman, Moneywell mortgage consultant.

Let's say you have a 30-year fixed rate loan for $300,000 with a 6.5 percent interest rate. Just by making one extra payment a year, you can save $84,000 in interest and pay off your house more than five and a half years early.

"I do recommend if you're going to make an extra payment to go ahead and say on the check 'please apply to principle'," said Newman.

Also, make sure your lender doesn't charge any pre-payment penalties. Another cash saving strategy is to pay your mortgage on a bi-weekly basis Same scenario. On a $300,000 loan, pay bi-weekly and you'll save $90,000 in interest and pay off the loan nearly six years early.

But, Newman says you have to factor in fees lenders might charge for paying twice a month.

"So you're going to want to find out if the lender you currently have your mortgage with offers bi-weekly payments and then b-if they do, what is the charge?" said Newman.

And remember, these strategies are best for someone who plans to pay off their entire mortgage. For those of you that want to do it, it'll mean huge savings.

Taking that first situation of making one extra payment a year you'll save $84,000 over the life of that loan.

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