You signed a stack of papers, got the keys, and moved in. Congrats. But if you're like most homeowners, there's a lot about your mortgage you don't actually understand. That's not your fault. Nobody explains this stuff well.
Here are 10 things about your mortgage that could save you real money if you know about them.
1. You can get rid of PMI without refinancing
If you put less than 20% down, you're paying private mortgage insurance. Most people think they're stuck with it until they refinance or hit 20% through their regular payments. Neither is true.
If your home has appreciated in value since you bought it, you may already have 20% equity based on the current value, not what you paid. Call your loan servicer and ask about getting a new appraisal. If the appraisal shows you're at 80% loan-to-value or better, they have to drop the PMI.
This could save you $100 to $300 a month depending on your loan size. The appraisal costs around $400 to $500. Do the math on that payback period.
If you want to see how much equity you might have right now, run your numbers through the calculator. It uses county-level appreciation data for Middle Tennessee.
2. Your credit score is the single most important number
People obsess over interest rates, but your credit score is what determines your rate in the first place. It also determines your PMI rate, your loan options, and in some cases whether you qualify at all.
Here's a rough idea of the difference: on a $350,000 loan, the gap between a 740 credit score and a 680 credit score could be 0.25% to 0.5% in rate. That's $50 to $100 more per month, which adds up to $18,000 to $36,000 over the life of a 30-year loan. Same house, same income, same everything. Just a different three-digit number.
If you're thinking about buying in the next 6 to 12 months, check your credit now. Not later. Now. Small moves like paying down a credit card below 30% utilization or catching up on a missed payment can shift your score meaningfully in a few months.
3. You can make extra principal payments any time
Your mortgage payment has four parts: principal, interest, taxes, and insurance. When you make your regular payment, most of it goes to interest in the early years. Very little chips away at the actual balance.
But you can make additional principal-only payments whenever you want. There's no penalty for this on most conventional, FHA, and VA loans. Even an extra $100 or $200 a month toward principal can shave years off your loan and save you tens of thousands in interest.
The key is to make sure you specify "apply to principal" when you send the extra payment. Otherwise your servicer might just apply it to next month's regular payment, which doesn't help you the same way.
4. Your rate isn't locked until it's locked
When a lender quotes you a rate over the phone, that's not your rate. It's just what's available at that moment. Rates change daily, sometimes more than once a day.
Your rate becomes real when you lock it, and a lock is only good for a set period, usually 30 to 60 days. If your closing gets delayed past the lock expiration, you could lose that rate. Ask your lender when they recommend locking and what happens if the lock expires. These are important details most people never think to ask about.
5. The interest rate isn't the true cost of the loan
Two lenders can offer you the exact same interest rate and one can cost you thousands more than the other. How? Fees. Origination charges, discount points, processing fees, underwriting fees. All of these show up on your Loan Estimate on page 2.
This is why comparing the rate alone is meaningless. You need to compare the total cost. The APR (annual percentage rate) gets closer to the true cost because it factors in fees, but even that doesn't tell the whole story. The best move is to put two Loan Estimates side by side and compare every line.
6. You don't need 20% down to buy a house
This is probably the most persistent myth in real estate. Yes, 20% down avoids PMI. But most first-time buyers aren't putting 20% down, and they don't need to.
Conventional loans go as low as 3% down. FHA loans allow 3.5%. VA loans (for veterans and active military) allow 0% down. USDA loans also allow 0% down for eligible rural and suburban areas, and more of Middle Tennessee qualifies than you'd think.
The tradeoff is PMI on conventional loans under 20%, or an upfront and monthly mortgage insurance premium on FHA. But these costs are often much less than the cost of waiting years to save up 20%. Take the readiness check to see where you stand.
7. Your property tax can change every year
When you get pre-approved, the lender estimates your property tax based on the current rate. But property taxes aren't fixed. Your county can reassess your home's value and your tax rate can change.
In Tennessee, counties reassess property values on a cycle (every 4 to 6 years depending on the county). When reassessment happens, your home's assessed value could jump significantly, especially if the market has been appreciating. That means your escrow payment goes up, which means your total monthly payment goes up, even though your interest rate didn't change.
It's not a reason not to buy. It's just something to be aware of so you're not surprised when your payment changes.
8. You can negotiate closing costs
Most people treat the closing cost estimate like a fixed bill. It's not. Several line items on your Loan Estimate are negotiable or shoppable.
Title insurance, home inspections, and survey fees are "shoppable services." You can get quotes from other providers. Origination fees and discount points are negotiable with your lender. And in many transactions, you can negotiate seller concessions where the seller pays a portion of your closing costs.
In a buyer-friendly market, seller concessions of 2% to 3% of the purchase price are common. That could be $7,000 to $10,000 on a $350,000 home. Your agent and lender should be working together to structure this.
9. Refinancing costs money too
When rates drop, everyone starts talking about refinancing. But refinancing isn't free. You're essentially getting a new mortgage, which means new closing costs, typically 1.5% to 3% of the loan balance.
The question isn't "is the new rate lower?" The question is "how long will it take for the monthly savings to pay back the cost of refinancing?" This is called the break-even point. If you plan to stay in the home long enough to hit that break-even, refinancing makes sense. If you might move in two years and the break-even is three, it doesn't.
I run this math for people all the time, and sometimes the honest answer is "don't refinance." Read more about when refinancing makes sense.
10. Your lender matters more than you think
A lot of people treat choosing a lender like choosing a gas station. Whoever's closest and cheapest wins. But your lender is the person managing the most complex financial transaction of your life for 30 to 45 days.
A good lender catches problems early, communicates proactively with your agent, meets deadlines, and tells you the truth. A bad lender goes dark after you're under contract, surprises you with fees, and puts your deal at risk.
The difference between the two can literally be the difference between closing on your dream home and losing it.
If you want to understand what to look for, read about the 6 types of loan officers you'll run into.
The bottom line
Your mortgage is probably the biggest financial commitment you'll ever make. Understanding how it actually works gives you leverage: to save money, to avoid surprises, and to make better decisions.
If any of this raised questions about your situation, reach out. I'm happy to walk through your specific numbers. That's what I'm here for.
Grant Shippel is a mortgage loan officer (NMLS# 2750635) with Princeton Mortgage, serving homebuyers across Nashville, Franklin, Murfreesboro, Hendersonville, Mount Juliet, and the greater Middle Tennessee area.