Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments that go to the principal. People employ various techniques to accomplish this goal. Making one extra payment one time every year may be the simplest to keep track of. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every other week. The result is you make one extra monthly payment every year. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Keep in mind that virtually all mortgages will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay extra on your mortgage principal when you come into extra money. Here's an example: five years after moving into your home, you receive a huge tax refund,a very large legacy, or a non-taxable cash gift; , you could apply this money toward your mortgage loan principal, which would result in significant savings and a shortened loan period. Unless the mortgage loan is very large, even modest amounts applied early can produce huge benefits over the duration of the loan.
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