There's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments which apply to the loan principal. People employ various techniques to meet this goal. Paying a single extra full payment once every year may be the simplest to track. If you can't afford to pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each of these options produces slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers can't manage any extra payments. Remember that virtually all mortgages will allow you to pay extra on your principal at any time. Any time you come into unexpected money, consider using this rule to make a one-time additional payment on your mortgage principal.
Here's an example: a few years after moving into your home, you receive a huge tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply a portion of this windfall toward your loan principal, resulting in significant savings and a shortened loan period. Unless the loan is quite large, even small amounts applied early can produce huge savings over the life of the loan.
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