Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments that are applied to your principal. You pay extra on principal in many different ways. Paying 1 additional full payment one time a year is perhaps the simplest to arrange. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Another option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment every year. Each of these options yields different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some people can't manage any extra payments. Remember that virtually all mortgage contracts will allow you to pay extra on your principal at any time. Any time you come into unexpected cash, you can use this rule to make an additional one-time payment toward mortgage principal. If, for example, you receive an unexpected windfall three years into your mortgage, you could apply a portion of this money toward your loan principal, resulting in significant savings and a shorter payback period. Unless the loan is very large, even small amounts applied early in the loan period can yield huge savings over the life of the loan.
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