Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments that go toward your principal. Borrowers use different methods to meet this goal. For many people,Perhaps the simplest way to organize this process is by making one additional mortgage payment every year. If you can't pay an extra whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every two weeks. The result is you make one additional monthly payment each year. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some borrowers can't manage extra payments. But remember that most mortgages will allow additional payments at any time. Any time you get some unexpected cash, consider using this provision to make a one-time additional payment toward your mortgage principal. If, for example, you were to receive a very large gift or tax refund three years into your mortgage, paying a few thousand dollars into your home's principal will shorten the duration of your loan and save a huge amount on interest over the duration of the loan. For most loans, even this modest amount, paid early in the loan period, could offer big savings in interest and length of the loan.
Do you have a question regarding a mortgage program?