There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that go toward the loan principal. People use different methods to accomplish this goal. For many people,Perhaps the simplest way to organize this process is by making one extra mortgage payment a 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. Finally, you can pay a half payment every other week. Each option yields slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. Keep in mind that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this rule to pay extra on your mortgage principal when you get some extra money. Here's an example: a few years after buying your home, you get a larger than expected tax refund,a large inheritance, or a cash gift; , you could pay this money toward your mortgage loan principal, which would result in enormous savings and a shorter loan 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.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.