Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments which are applied to the principal. Borrowers can accomplish this in several ways. For many people,Perhaps the simplest way to organize this process is to make 1 additional payment per year. But many folks can't afford such an enormous extra expense, so splitting a single additional payment into twelve extra monthly payments is a fine option too. Another option is to pay half of your payment every other week. The result is you make one extra monthly payment every year. Each of these options yields slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay extra every month or even every year. Keep in mind that most mortgage contracts will permit you to pay extra on your principal at any point during repayment. You can benefit from this rule to pay extra on your principal when you get some extra money.
If, for example, you receive a very large gift or tax refund just a few years into your mortgage, paying a few thousand dollars into your home's principal will significantly reduce the duration of your loan and save a huge amount on interest over the duration of the mortgage loan. 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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