Mortgage rates are rising. The average 30-year fixed-rate mortgage recently stood at 4.74 percent, a significant increase over the rates homeowners were paying in 2012, according to a Bankrate survey of the nation's largest lenders on Aug. 22, 2013.
By contrast, the national average mortgage interest rate for a 30-year fixed loan stood at only 3.53 percent on Oct. 4, 2012, Bankrate reported.
That may not sound like a big difference -- it's just a little more than 1 percent -- but it makes for a substantial increase in your monthly payment.
Plug the numbers into Bankrate's mortgage calculator, and you will find that a 30-year fixed-rate $200,000 mortgage at 4.7 percent results in a monthly payment of $1,037. By contrast, lowering the interest rate to 3.5 percent for the same mortgage yields a monthly payment of just $898.
If you were to take that $139 difference and apply it as an extra monthly payment toward the loan balance on the 3.5 percent mortgage, you would finish paying off your mortgage six years early. You also would save more than $29,000 in interest.
Let's assume you want to buy a new home, or to refinance an old mortgage. How can you save money in the wake of these higher rates? Here are some ideas.
Pretend you pay an even higher rate
Not long ago, mortgage interest rates stood at 5.5 percent or more. Rather than focusing on the ultra-low rate that you didn't get, think about the historically higher rate that you were able to avoid.
Then, "pretend" that you're paying a mortgage at this higher rate. This little mental trick can motivate you to make additional payments.
For example, a $200,000 loan at 5.5 percent would cost $1,135 per month. If your mortgage is only $1,037 per month (using the example above), "pretend" that you have a 5.5 percent interest rate and pay the extra $98 per month.
Cut costs and earn more
Chop one current expense -- such as your cable TV bill -- and redirect those savings toward your mortgage payment. In addition, take on a few extra hours at work, or one additional freelancing job. This could bring in another $100 or $200 per month.
Take the proceeds from both cutting costs and earning more money and use them to pay down your mortgage.
Scrutinize your property taxes
Counties charge property taxes based on the assessed value of your home. The housing crash caused home values to plummet drastically, which means some homeowners may be overpaying taxes based on assessments that are too high.
If you think that your tax assessment is wrong, request that your county review it. A drop in property taxes will result in a smaller monthly mortgage bill.
Paula Pant blogs at AffordAnything.com about building wealth and living life on your own terms. She's traveled to nearly 30 countries, owns six rental units that produce thousands in passive income, and runs her own digital marketing company. Follow Paula on Twitter @AffordAnything.