Paying down your mortgage, home improvement in sight or not, is essential if you want to improve your credit. Try making a bigger payment every month and try to get rid of higher-interest debt first. That means if you have an outstanding home improvement loan that's at an 8% interest rate and your mortgage is only 3%, you should focus on paying down the home improvement loan first.
You can always refinance your mortgage, too. This is another way to save money over the life of the loan.
Of course, the simplest piece of advice to follow is to buy a home that you can realistically afford. When you're shopping for a home, you'll get pre qualified first. The bank will look at your income, credit score, and other aspects of your financial picture and come back with a number. This number is the amount that you can likely get a loan for.
Unfortunately, many homebuyers use this number as their upper budget for what they can afford. The bank is really just estimating with that number – while it can be helpful to you when you're setting your own home budget, don't get too attached to these numbers. Make sure you're being as realistic as possible in your estimates.
Also, understand how mortgage points work. When you are trying to figure out how much your mortgage will ultimately cost you, your lender will give you a quote that includes not only your loan rates but also your points. There are two kinds of points – origination fees and discounts. Discounts are prepaid interest on the mortgage – so the more you pay in advance, the lower your interest rate will be.
You'll have to pay more upfront, but you could end up saving more over the life of the loan.
Origination fees are charged by the lender to cover the cost of making the loan. You may want to pay extra toward the origination fees rather than rolling them into your mortgage, since rolling them in will essentially mean you are financing more of the home than you really need to.
Those are a few ways to save more money on your mortgage over time so that you might be able to realistically pay it off in ten years or less. Of course, when it comes time to crunch the numbers and really get aggressive on paying down that mortgage, you might want to call your bank or mortgage company.
Ask them what the payments would be to pay off the loan in two, five, ten years – however many years it is that you want to take. They'll calculate a rate for you that includes the lower amount of interest (since you won't be accruing as much interest by paying off the loan early). You can do these calculations yourself, too, if you want to save time and skip the call to the bank.
In some cases, paying down your mortgage in 10 years may not make that much sense. Chances are, if you compare your mortgage interest rates to the other debts you hold, your mortgage interest rates are probably the lowest. Focus on paying down the most expensive debts first, like high-interest credit cards, medical bills, and loans. You'll ultimately end up saving more money over time in this way.