Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments which are applied toward the principal. You can accomplish this using a few different techniques. Paying one additional payment one time per year is probably the easiest to arrange. Of course, some folks can't afford such an enormous additional payment, so dividing a single additional payment into 12 additional monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. Each of these options yields different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks can't manage any extra payments. But it's important to note that most mortgage contracts allow you to make additional principal payments at any time. Whenever you get some unexpected cash, you can use this provision to pay an additional one-time payment on mortgage 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; , you could apply a portion of this money toward your loan principal, which would result in significant savings and a shorter payback period. For most loans, even a relatively small amount, paid early enough in the loan period, could offer big savings in interest and in the duration of the loan.
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