Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments which go toward the principal. Borrowers can do this in various ways. Paying 1 extra full payment one time per year may be the simplest to keep track of. Of course, many people will not be able to pull off such a large additional expense, so splitting one extra payment into 12 additional monthly payments is a fine option too. Finally, you can pay half of your mortgage payment every other week. Each of these options yields different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
Some people just can't make extra payments. Keep in mind that most mortgages will permit you to make additional payments to your principal at any point during repayment. Whenever you come into extra money, you can use this rule to make a one-time additional payment toward principal.
Here's an example: a few years after buying your home, you get a very large tax refund,a very large inheritance, or a cash gift; , you could pay this windfall toward your loan principal, resulting in significant savings and a shortened payback period. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge benefits over the duration of the loan.
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