Today home equity rate

Home Equity

Pay a little now, save big later

We all know that refinancing a home to get a lower mortgage rate or cutting the repayment time from 30 years to 15 years can save you a bundle, because you're slashing the charges you'll pay in interest. But with interest rates climbing, those options may seem out of reach for you.

Don't despair. Marc Eisenson, one of my neighbors here in New York's Hudson Valley, teaches us that even taking baby steps to reduce your mortgage obligation can bring big rewards. Eisenson, author of The Banker's secret, paid off his own mortgage when he was 27 years old.

The secret? Stop giving so much of your money to the banks in interest. Homeowners can save thousands of dollars in interest charges over the life of a loan by adding a little extra-say $25 or $50-to each monthly mortgage payment. For example, adding $25 a month to the payment on a 30-year, $100,000 mortgage, saves $23,337 over the life of the loan.

If you own a home, your mortgage company may have offered to sign you up for a "biweekly" mortgage plan whereby a portion of your mortgage payment is withdrawn from your bank account every other week. These plans will save you on interest payments over the long haul. But many mortgage companies take a bite by charging borrowers a set-up fee and monthly service charge to participate in this option. You're better off skipping the fees and adding your own extra payment to your check. Make sure to designate on your check that the extra money is for paying down your principal balance.