Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments which are applied toward the principal. People employ various techniques to accomplish this goal. Making one additional payment one time per year is perhaps the simplest to track. If you can't pay an extra 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 option is to pay a half payment every two weeks. The result is you will make one extra monthly payment each year. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. But remember that most mortgages allow you to make additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal any time you come into extra money. Here's an example: several years after moving into your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could pay this windfall toward your mortgage loan principal, resulting in significant savings and a shortened payback period. For most loans, even a modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
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