Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that are applied toward your loan principal. You can accomplish this in several ways. Paying one additional full payment one time every year is likely the simplest to track. If you can't afford to pay an additional whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Another option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment in a year. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Keep in mind that virtually all mortgages will allow you to make additional payments to your principal at any time. Whenever you get some extra cash, you can use this rule to make a one-time additional payment toward your mortgage principal. Here's an example: a few years after buying your home, you receive a very large tax refund,a large inheritance, or a cash gift; , paying several thousand dollars into your mortgage principal can significantly reduce the repayment period of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. For most loans, even this relatively small amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.
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