There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments which are applied to your principal. You can pay more on principal by employing various techniques. Paying a single extra payment once every year is likely the easiest to keep track of. Of course, some people will not be able to swing such a large additional expense, so splitting an additional payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option produces slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. But remember that most mortgages allow additional principal payments at any time. You can take advantage of this provision to pay extra on your mortgage principal any time you come into extra money.
Here's an example: several years after moving into your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could pay a portion of this money toward your loan principal, which would result in huge savings and a shorter loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.
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