There's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make extra payments which go toward your principal. People pay extra in several ways. Paying a single additional payment one time per year is likely the easiest to keep track of. However, some folks will not be able to pull off such an enormous extra expense, so splitting a single additional payment into 12 additional monthly payments works as well. Another option is to pay a half payment every two weeks. The result is you make one additional monthly payment in a year. Each of these options produces different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some borrowers can't manage any extra payments. Remember that most mortgage contracts will permit you to pay extra on your principal at any time. Any time you get some extra cash, consider using this provision to pay a one-time additional payment toward principal.
Here's an example: a few years after buying your home, you get a very large tax refund,a large inheritance, or a cash gift; , paying several thousand dollars into your home's principal will reduce the duration of your loan and save enormously on mortgage interest over the life of the mortgage loan. For most loans, even a relatively modest amount, paid early in the loan period, could offer huge savings in interest and length of the loan.
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