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At the same interest rate, a 15 year mortgage will require higher monthly payments than a 30 year mortgage. But because you are paying back the loan faster, the total amount of interest paid will be lower for a 15 year loan. The interest rates on a 30 and a 15 year loan may also be different—currently, interest on a 15 year mortgage is lower than on a 30 year mortgage, resulting in additional savings.

TIP: Be sure you can afford the higher monthly payment on a 15 year mortgage! Often the 30-year mortgage may offer more flexibility: you can always make extra payments to reduce total interest paid and shorten the length of the loan but have the option of paying the lower monthly payment if you are strapped for cash in a given month.

Making smaller payments every two weeks instead of once a month saves you interest and pays down your loan faster. How? By making payments every two weeks you actually end up paying more per year (the equivalent of one extra monthly payment).

Private mortgage insurance protects the mortgage lender in the event you default on your loan. You are typically required to pay for PMI if you are taking out a loan that is greater than 80% of the value of the home (in other words, your down payment is less than 20% of the total value). By adjusting your down payment such that the mortgage loan is less than or equal to 80% of the home value (or the LTV-loan to value ratio-is less than or equal to 80%), PMI dues can be completely avoided.

You could also save in interest over the life of the loan by taking the difference in PMI payments and making extra monthly payments on your loan.