Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments that apply toward the loan principal. People make this happen in a few ways. For many people,Perhaps the easiest way to organize this process is by making 1 additional mortgage payment a year. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay half of your payment every other week. The result is you will make one extra monthly payment every year. Each of these options yields slightly different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any time. You can take advantage of this rule to pay extra on your principal when you get some extra money.
Here's an example: several years after moving into your home, you receive a very large tax refund,a large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your mortgage principal can reduce the repayment duration of your loan and save a huge amount on interest over the duration of the loan. Unless the loan is quite large, even modest amounts applied early in the loan period can yield huge benefits over the life of the loan.
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