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 additional payments which go to your principal. Borrowers accomplish this goal in a few different ways. For many people,Perhaps the easiest way to keep track is by making one extra mortgage payment every year. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in reducing the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. Keep in mind that virtually all mortgages will permit you to make additional payments to your principal at any time. Whenever you come into extra cash, you can use this rule to make an additional one-time payment toward your principal.
If, for example, you receive a surprise windfall five years into your mortgage, paying several thousand dollars into your home's principal can significantly shorten the period of your loan and save a huge amount on interest over the life of the mortgage loan. For most loans, even a modest amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
Do you have a question regarding a mortgage program?