Self-made millionaire: Use this simple trick to save $44,000 on your mortgage

The biggest mistake millennials are making is not buying a home, says financial expert

According to co-founder of AE Wealth Management David Bach, "buying a home is the escalator to wealth in America."

But because of affordability issues and the fact that younger generations have other priorities, homeownership rates — for millennials in particular — have steadily declined since the early 2000s.

While home prices are set to soar in 2018, Bach still thinks it's a mistake to rent instead of buy. "Homeowners are worth forty times more than renters," he tells CNBC Make It, adding, "The biggest mistake millennials are making is not buying their first home."

Self-made millionaire and bestselling author David Bach
Courtesy of David Bach

If you're ready to buy, start by figuring out how much home you can afford and make sure you can make a down payment of at least 10 percent. Next, use one simple trick to save tens of thousands of dollars on your mortgage: Switch to a bi-weekly payment plan.

That means, "instead of paying your mortgage once a month, you actually set it up with your bank and pay half a mortgage payment every two weeks."

So if your mortgage payment is $1,000 a month, you will pay $500 every two weeks. Since you're making payments every other week, rather than once a month, you'll end up making one extra payment a year.

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By paying half of your monthly payment every two weeks, over the course of a year, you will make 26 half-payments. That's the same as 13 full payments, or one more payment than there are months in a year.

Making more payments means paying your mortgage off sooner, which means paying less in interest. It depends on your interest rate, but "on an average mortgage in America, you'll save over $44,000 in interest payments," Bach tells CNBC Make It.

To see just how much you can save by using a bi-weekly plan, plug in your own numbers on Bankrate's mortgage payment calculator.

You may have to pay a one-time set-up fee to switch payment plans, but "many banks offer it for no extra cost," notes Bach.

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