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 additional payments which apply toward the principal. You can pay more on principal in many different ways. For many people,Perhaps the simplest way to keep track is by making 1 additional payment per year. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The result is you will make one extra monthly payment each year. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But remember that most mortgages allow you to make additional principal payments at any time. You can take advantage of this rule to pay extra on your principal when you come into extra money.
For example: several years after buying your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal can reduce the duration of your loan and save enormously on interest paid over the life of the mortgage loan. For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
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