Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that go to your loan principal. You can pay extra on principal in various ways. For many people,Perhaps the easiest way to organize this process is by making one extra payment every year. However, many folks won't be able to swing such a large extra payment, so splitting a single extra payment into 12 additional monthly payments is a great option too. Finally, you can commit to paying a half payment every two weeks. Each option produces different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Keep in mind that almost all mortgage contracts will allow you to pay extra on your principal at any time. You can benefit from this rule to pay extra on your principal when you get some extra money. For example: five years after buying your home, you get a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , you could pay this windfall toward your mortgage loan principal, which would result in enormous savings and a shorter payback period. For most loans, even this relatively modest amount, paid early in the loan period, could offer huge savings in interest and in the length of the loan.
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