As you begin planning your financial life around you new home, there are a few things you should keep in mind. These will help you reduce your mortgage quickly and effectively. You should follow this course:

1. Refinance high rate loans that were arranged many years ago, with lower rate mortgages that are currently available on the market.
2. Amortize your home mortgage quickly to enhance your financial security. Consider a 15-year mortgage when refinancing.
3. Pay off a home mortgage with money that would otherwise go into a savings account. For example, if Certificates of Deposit pay 5%, and your mortgage debt is at 8%, then reducing the mortgage is the better investment. Keep this in mind if you receive a bonus or a tax refund.
4. Consider increasing your mortgage payment by a systematic amount, such as $100 per month or more (towards the principal), so you can retire the debt faster.
5. Consider taking adjustable-rate loans, especially ones that have a long period of fixed rates (5-7 years), with tolerable rate ceilings on renewal.
6. Check on the income tax law pertaining to home interest deductions before refinancing with a larger debt or taking out a second mortgage.
7. Check on loan assumability, prepayment privileges and penalties before you arrange new financing.
8. If you want to pay off a mortgage earlier, there is a better way. Get a 30-year mortgage (with a no-prepayment feature), but pay it off using a 15-year payment schedule. So if you borrowed say, $100,000 at 8%, for 30 years, your payments would come to $734 a month. But instead of paying $734 per month, you paid $934 per month, which is $200 extra, towards the principal, you shall work on a better schedule. Not only will you see your mortgage go down, but also if you ever face some tough times, in case of sickness or financial hardship, you can easily fall back to paying $734, the amount you were contracted to pay at the beginning, because you were never locked in to pay the higher amount. That was your voluntary choice.

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