Here's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make extra payments which apply toward the loan principal. Borrowers can do this in several ways. Paying one extra payment one time a year may be the easiest to arrange. Of course, some people won't be able to afford such a large extra expense, so splitting an additional payment into twelve extra monthly payments is a great option too. Finally, you can pay half of your mortgage payment every other week. Each of these options yields different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. But remember that most mortgages allow you to make additional payments at any time. Whenever you get some extra cash, you can use this provision to pay a one-time additional payment toward mortgage principal. Here's an example: five years after buying your home, you receive a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , paying several thousand dollars into your home's principal can significantly reduce the repayment period of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. For most loans, even a relatively small amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.
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