You pay the very same amount on your mortgage each month, but a simple exercise that doesn’t change the amount can save you a fortune. Not many people realize how simple this can be.

Most of us receive our paycheck once every two weeks. If you are like most people, as soon as you are first paid, you spend a lot because the cash is there, but cash gets tight towards the end of the pay period. And yet, we basically spend the same amount every week.

But we spend the bulk of our money early in the period and then struggle at the end. Experts advise that the best way to avoid this problem is to budget our funds, and since your home loan is probably your biggest expense, that is the most sensible thing to budget.

You can cut as many as seven years off the length of your home loan with this process, and save thousands of dollars in interest as you do. Let us use an example of an $80,000 fixed, 30 yr, 7% mortgage-about $25,000 may be saved on such a mortgage using this method.

The method is simply to budget mortgage payments and pay half out of each paycheck, instead of all out of one. (Most people pay their home loan at the end of the month, so it gets to the bank on the due date.).

This one week earlier payment schedule builds up the payments on your loan, so that your entire loan is paid off that much sooner. In this way, you pay less interest on the loan in total.

This is because of the unique way that mortgage payments are applied; most of the payment is used to pay interest, not principal. While you are paying this small bit of principal, the interest accrues. But if you ncrease the frequency of the payments, the interest is paid down earlier, and then your payment starts to lower your principal. The end result is that the principal is paid down earlier!

Your bank may have a designated form for this type of transaction, but even if they don’t, just send your payment in with your mortgage number clearly indicated on it. You can also duplicate your payment forms and just change the month it is intended for.

You pay exactly the same amount on your home loan each month, but because you pay half of it early each month, you reap the dual benefit of saving tens of thousands of dollars in interest, and you will pay your mortgage down earlier.

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Everywhere you look, you will be bombarded with ads stating that this particular mortgage broker has the best rates and terms for you. Frankly, many of these ads are just to lure you in and then you learn the terms are not exactly as advertised.

One way to avoid these come ons is to make sure you know the lender. If the lender with the most attractive rates is not known to you, get any information you can. You can verify them with the Better Business Bureau or the state banking commission to learn if they have had many complaints against them.

Another thing you need to do for a problem free closing is to choose a bank that specializes in your type of loan. Discover how long they have been in business and how long the broker you will be working with has been in business. If you deal with an established, reputable company, it is not likely that there will be any problems at the closing.

Conduct a lot of research. As much as the internet has overloaded us with information, it has also made it easier to get the information that we need. But it is important to be familiar with all of the various types of loans out there and what terms are available. Make a comparison chart of all of the lenders you get information from.

Make sure you are clear on for whom these rates are meant. You may see some realy good rates, but only those with absolutely top notch credit ratings are going to see those rates. If your credit score is not the highest, you may pay a premium over the advertised rate.

After you have a compilation of rates, you can make your comparisons. As they say, if it sounds too good to be true, it most likely is. You are sure to find some differences in rates, but if one bank is inordinately lower than the others, this should be a red flag for you.

Don’t allow a lender to force you into signing a commitment right away. Make sure your broker wants to take the trouble to explain terms, rates, points, maturity, and anything else to you. If you don’t comprehend, keep digging until you do. If he is impatient with your queries, find another mortgage broker.

Once you understand the terms, get them in writing. Make sure all the terms are in the agreement; don’t let the broker tell you that some details will be ironed out later. Be sure that the index on an adjustable rate loan is in this agreement. Check to make sure that the terms of any lock in period are included. Finally, be sure the written document is on the letterhead of the broker or lender, and signed. A lot of headaches happen because of so called verbal contracts.

Even after you receive the agreement, review it to be sure it is still clear to you. Too often, what you have agreed to will be translated to in incomprehensible legalese. Have it changed to clear language so you understand what the terms are. Once again, if the lender is not willing to do this, walk away.

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