There's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments that apply toward the principal. You pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is by making one extra mortgage payment per year. Of course, some folks can't swing such a large additional payment, so splitting one additional payment into 12 additional monthly payments works too. Finally, you can pay half of your mortgage payment every other week. These options differ a little in reducing the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some borrowers can't manage extra payments. Remember that almost all mortgages will allow you to make additional payments to your principal at any time. Whenever you come into extra cash, you can use this provision to make an additional one-time payment toward your mortgage principal.
Here's an example: five years after moving into your home, you get a very large tax refund,a very large inheritance, or a cash gift; , you could pay a portion of this money toward your mortgage loan principal, which would result in enormous savings and a shortened loan period. For most loans, even this modest amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
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