Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments which apply to the loan principal. Borrowers pay more on principal by employing various techniques. Making 1 extra full payment once per year is perhaps the easiest to arrange. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay a half payment every two weeks. The result is you will make one extra monthly payment every year. Each option yields different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgages will allow additional payments at any time. Whenever you get some unexpected money, you can use this provision to pay a one-time additional payment on mortgage principal.
Here's an example: several years after moving into your home, you get a huge tax refund,a large legacy, or a cash gift; , you could apply this windfall toward your mortgage loan principal, which would result in huge savings and a shortened payback period. For most loans, even a small amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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